The effect of steam on the catalytic properties of La-Zr-HZSM-5/Al2O3 and Mg-HZSM-5/Al2O3 in the synthesis of olefins from dimethyl ether (DME) has been studied. It has been found that the presence of steam has a significant effect on the ethylene-to-propylene ratio regardless of the nature of the modifier; the formation of methanol was observed only on Mg-HZSM-5/Al2O3. In situ high-temperature diffuse reflectance infrared Fourier transform (DRIFT) spectroscopy has revealed that the formation of methanol on Mg-HZSM-5/Al2O3 occurs owing to the formation of methoxy groups on the surface of the zeolite during the interaction between DME and basic sites. The resulting methoxy groups can be easily converted to methanol in the presence of steam.