Selective synthesis of p-xylene by vapor phase alkylation of toluene with dimethyl carbonate, over MgO-modified MCM-22, was carried out to demonstrate the relationship between acidity and catalytic performance. Characterization results show that the number of Brønsted acid sites on MCM-22 decreased significantly after MgO modification, which resulted in a decrease in activity. Selectivity for p-xylene was improved greatly over MgO-modified MCM-22, which can be attributed to effective suppression of xylene isomerization by the reduction in external surface Brønsted acid sites. The additional Lewis acid sites generated after MgO modification had no apparent effect on the catalytic performance.