A series of V/MCM-41 catalytic materials was synthesized by impregnation of MCM-41 and the addition of vanadium during the preparation of MCM-41. The nature and distribution of the VO x species were studied by different spectroscopic techniques (TEM, TPR, in situ UV–vis, and in situ Raman). Highly dispersed VO x species, which can be classified as monomeric and small two-dimensional VO x aggregates, are present in materials with a vanadium loading of up to 5.3 wt% under conditions of the oxidative dehydrogenation of propane (ODP) and are independent of the preparation method. These VO x species exhibit similar specific catalytic performance in the ODP reaction as a function of vanadium loading or apparent vanadium surface density. Crystalline V 2 O 5 nanoparticles, however, are formed for 11.2 wt% V when the MCM-41 porous structure collapses. For all V/MCM-41 catalysts used in this study, higher propene selectivity is achieved with N 2 O as compared with O 2 at similar degrees of C 3 H 8 conversion. The catalytic activity is lower, however, in the presence of N 2 O as compared with O 2 because of the weaker oxidizing potential of N 2 O relative to O 2 for the re-oxidation of the reduced surface VO x sites during the ODP reaction. There is no significant difference in propene selectivity between highly dispersed surface VO x species and crystalline V 2 O 5 nanoparticles when N 2 O is used as an oxidant. In contrast to highly dispersed VO x on the surface of MCM-41, the crystalline V 2 O 5 nanoparticles are not selective for the ODP reaction in the presence of O 2 . The positive effect of N 2 O is related to the inhibition of direct C 3 H 8 oxidation and the consecutive oxidation of C 3 H 6 to CO x . The inhibition is ascribed to reducing surface density (spatial separation) of active surface lattice oxygen in VO x species, since N 2 O is a weaker oxidant for re-oxidation of reduced VO x species as compared with O 2 . From a stoichiometric point of view of the ODP reaction, selective propene formation is favored over combustion reactions at lower surface densities.