We studied propylene production by the reaction of propane with oxygen in the presence of gaseous I-2 which works as a gas-phase catalyst. I-2 is either introduced as a gas in the mixture of propane and oxygen, or it is produced when propane and oxygen come in contact with molten LiI or a mixture of molten LiI and LiOH. The single-pass propylene yields obtained in both types of experiments are similar to 64%, at 500 A degrees C and propane partial pressure of 0.1 atm. The main role of I-2 is to initiate chain reactions that lead to the formation of a propyl iodide intermediate that decomposes to form propylene. Another important intermediate is HI, which reacts very rapidly with oxygen to regenerate I-2 and prevent oxygen from attacking the hydrocarbons.