Chemical looping combustion (CLC) is a promising technology for fossil fuel combustion that produces sequestration-ready CO2 stream, reducing the energy penalty of CO2 separation from flue gases. An effective oxygen carrier for CLC will readily react with the fuel gas and will be reoxidized upon contact with oxygen. This study investigated the development of a CeO2-promoted Fe2O3-hematite oxygen carrier suitable for the methane CLC process. Composition of CeO2 is between S and 25 wt % and is lower than what is generally used for supports in Fe2O3 carrier preparations. The incorporation of CeO2 to the natural ore hematite strongly modifies the reduction behavior in comparison to that of CeO2 and hematite alone. Temperature-programmed reaction studies revealed that the addition of even 5 wt % CeO2 enhances the reaction capacity of the Fe2O3 oxygen carrier by promoting the decomposition and partial oxidation of methane. Fixed-bed reactor data showed that the 5 wt % cerium oxides with 95 wt % iron oxide produce 2 tithes as much carbon dioxide in comparison to the sum of carbon dioxide produced when the oxides were tested separately. This effect is likely due to the reaction of CeO2 with methane forming intermediates, which are reactive for extracting oxygen from Fe2O3 at a considerably faster rate than the rate of the direct reaction of Fe2O3 with methane. These studies reveal that 5 wt % CeO2/Fe2O3 gives stable conversions over 15 reduction/oxidation cycles. Lab-scale reactor studies (pulsed Mode) suggest the methane reacts initially with CeO2 lattice oxygen to form partial oxidation products (CO + H-2), which continue to react with oxygen from neighboring Fe2O3, leading to its complete oxidation to form CO2. The reduced cerium oxide promotes the methane decomposition reaction to form C + H-2, which continue to react with Fe2O3/Fe3O4 to form CO/CO2 and H2O. This mechanism is supported by the characterization studies, which also suggest that the formation of carbonaceous intermediates may affect the reaction rate and selectivity of the oxygen carrier.