The role of vanadyl and peroxovanadate oxygen species in the oxidative dehydrogenation of propane (ODP) was analyzed by density functional theory (DFT). The dehydrogenation of C3H8 to C3H6 and the oxidation of C3H6 occurred over vanadyl oxygen of VOx species, yielding reduced VOx species. The vanadyl oxygen species were restored via reoxidation of reduced VOx species with O-2 and N2O. The ODP reaction with N2O occurred via a V-V(d(0))/V-III(d(2)) redox couple, whereas both V-V(d(0))/V-IV(d(1)) and V-V(d(0))/V-III(d(2)) redox cycles were active with O-2. O-2 was a more active oxidizing agent than N2O. Peroxovanadates as precursors of vanadyl species were formed on reoxidation of reduced vanadium oxide species with O-2, but not with N2O. Peroxovanadates were highly reactive for propene oxidation. The absence of peroxovanadates may explain the superior performance of N2O compared with O-2 in the selective ODP reaction over highly dispersed VOx species. (C) 2008 Elsevier Inc. All rights reserved.