The adsorption of methanol on V2O5 and its mild oxidation to formaldehyde has been studied applying density functional theory. The model used throughout is a cluster model saturated by hydrogen atoms. It is shown that the adsorption of methanol is energetically favored if the cluster is partially reduced (i.e., protonated because of the dissociative adsorption of water). Methanol behaves as a soft base and adsorbs as a methoxonium cation. The proposed mechanism is based on two steps, the first being the dissociation of methanol to form a methoxy group on the surface. This dissociation occurs between the oxygen and the carbon atoms of methanol. Finally, for the second step, which corresponds to the desorption of formaldehyde, the calculations show that filling of the vanadyl oxygen vacancy created by formaldehyde desorption is crucial to cope with an energetically feasible reaction pathway.