Selective oxidation reactions on heterogeneous silver catalysts are essential for the mass production of numerous industrial commodity chemicals. However, the nature of active oxygen species in such reactions is still debated. To shed light on the role of different oxygen species, we studied the methanol oxidation reaction on Ag(111) single-crystal model catalyst surfaces containing two dissimilar types of oxygen (electrophilic, Oe and nucleophilic, On). X-ray photoelectron spectroscopy and low energy electron diffraction experiments suggested that the atomic structure of the Ag(111) surface remained mostly unchanged after accumulating low Oe coverage at 140 K. Temperature-programmed reaction spectroscopic investigation of low coverages of Oe on Ag(111) revealed that Oe was active for methanol oxidation on Ag(111) with a high selectivity toward formaldehyde (CH2O) production. High surface oxygen coverages, on the other hand, triggered a reconstruction of the Ag(111) surface, yielding Ag oxide domains, which catalyzes methanol total oxidation to CO2 and decreases the formaldehyde selectivity. This important finding indicates a trade-off between CH2O selectivity and methanol conversion, where 93% CH2O selectivity can be achieved for an oxygen surface coverage of θO = 0.08 ML (ML = monolayer) with moderate methanol conversion, while methanol conversion could be boosted by a factor of ∼4 for θO = 0.26 ML with a suppression of CH2O selectivity to 50%. Infrared reflection absorption spectroscopy results and density functional theory calculations indicated that Ag oxide contains dissimilar adsorption sites for methoxy intermediates, which are also energetically less stable than that of the unreconstructed Ag(111). The current findings provide important molecular-level insights regarding the surface structure of the oxidized Ag(111) model catalyst directly governing the competition between different reaction pathways in methanol oxidation reaction, ultimately dictating the reactant conversion and product selectivity.