CeO₂-Catalyzed C₂H₂ semihydrogenation reaction is a newly emerging catalytic reaction, but the reaction mechanism is not established. We herein report a comprehensive mechanistic study by in situ diffuse reflectance infrared Fourier transformed spectroscopy. Various types of surface species were observed to form upon C₂H₂ and C₂H₄ adsorption on CeO₂ at different temperatures, including molecularly-adsorbed π-bonded and di-σ-bonded species, dissociatively-adsorbed species of C₂H and C₂H₃, carbonates and formate species, and oligomers species, respectively. During the C₂H₂ semihydrogenation reaction, the CeO₂ surface is partially reduced and strongly hydroxylated. Both O and Ce sites on CeO₂ are capable of catalyzing C₂H₂ semihydrogenation reaction to C₂H₄, and the O site is more active than the Ce site. The reaction mechanism was elucidated with observed molecularly-adsorbed C₂H₂ species, a C₂H₃ intermediate and adsorbed C₂H₄ species on CeO₂. The π-bonded C₂H₂ species at the O site was identified as the dominant active surface species for CeO₂-catalyzed C₂H₂ semihydrogenation reaction. These results greatly advance the fundamental understanding of CeO₂-catalyzed C₂H₂ semihydrogenation reaction.