A detailed density functional theory study is presented to clarify the mechanistic aspects of the methanol (CH3OH) dehydrogenation process to yield hydrogen (H2) and formaldehyde (CH2O). A gas-phase vanadium oxide cluster is used as a model system to represent reduced V(III) oxides supported on TiO2 catalyst. The theoretical results provide a complete scenario, involving several reaction pathways in which different methanol adsorption sites are considered, with presence of hydride and methoxide intermediates. Methanol dissociative adsorption process is both kinetically and thermodynamically feasible on V-O-Ti and V═O sites, and it might lead to form hydride species with interesting catalytic reactivity. The formation of H2 and CH2O on reduced vanadium sites, V(III), is found to be more favorable than for oxidized vanadium species, V(V), taking place along energy barriers of 29.9 and 41.0 kcal/mol, respectively.