Effective catalysts for the direct conversion of methane to methanol and for methane’s dry reforming to syngas are Holy Grails of catalysis research toward clean energy technologies. It has recently been discovered that Ni at low loadings on CeO2 is very reactive towards reactants CH4, H2O and CO2 and active for both of these reactions. Revealing the nature of the active sites in such systems is paramount to a rational design of improved catalysts. Here, using a combination of experimental measurements and density functional theory calculations, we show that the most active sites are cationic Ni atoms in clusters at step edges on the CeO2 surface, using the activation of CH4 as an example . We show that the size and morphology of the supported nanoparticles together with strong Ni−support bonding and charge transfer at the step edge are key to the high catalytic activity towards these methane conversions. We anticipate that this knowledge will inspire the development of more efficient catalysts for these reactions.