Acetic acid is an important petrochemical that is currently produced from methane (or coal) in a three-step process based on carbonylation of methanol. We report a direct, selective, oxidative condensation of two methane molecules to acetic acid at 180°C in concentrated sulfuric acid. 13C isotopic labeling studies show that both carbons of acetic acid originate from two methane molecules in a formal eight-electron redox reaction. The reaction is catalyzed by palladium and the results are consistent with the reaction occurring by tandem catalysis involving methane C–H activation to generate Pd-CH3 species, followed by efficient oxidative carbonylation with methanol, generated in situ from methane, to produce acetic acid. Control Experiments suggest that the carbonylation occurs via the in situ oxidation of CH3OH to low levels of CO.