Methane production over the three-way catalyst has been observed for E85 (blend of 85% anhydrous ethanol and 15% gasoline)-fuelled vehicles. In order to understand the mechanisms of the methane production, the oxidations of ethanol and acetaldehyde were studied in laboratory flow reactor using commercial three-way catalysts containing Pd/Rh Ce-Zr-O. The influence of H₂O (absence/presence/concentration) and CO (absence/presence) in the gas feed was also studied. In this paper, a mechanism for the production of methane is proposed. As will be shown in the results section, ethanol oxidation over the TWC resulted in partial and total oxidation products (acetaldehyde, CH₄, CO, CO₂ and water), while acetaldehyde oxidation over the TWC resulted in partial and total oxidation products (CH₄, CO, CO₂ and water). Thus, the formation process of methane over Pd/Rh Ce-Zr-O catalyst was found to be represented by a reaction mechanism involving acetaldehyde formation from ethanol and catalytic oxidation of acetaldehyde to methane and carbon monoxide. The results indicated a strong correlation between CO presence in the feed and the formation of methane from ethanol and acetaldehyde. Furthermore, the experimental results showed that while the water concentration did not influence the start and final temperature for methane production, the water concentration did have an influence on the amount of produced methane.