Polycrystalline silver is used to catalytically oxidise methanol to formaldehyde. This paper reports the results of extensive investigations involving the use of environmental scanning electron microscopy (ESEM) to monitor structural changes in silver during simulated industrial reaction conditions. The interaction of oxygen, nitrogen, and water, either singly or in combination, with a silver catalyst at temperatures up to 973 K resulted in the appearance of a reconstructed silver surface. More spectacular was the effect an oxygen/methanol mixture had on the silver morphology. At a temperature of ca. 713 K pinholes were created in the vicinity of defects as a consequence of subsurface explosions. These holes gradually increased in size and large platelet features were created. Elevation of the catalyst temperature to 843 K facilitated the wholescale oxygen induced restructuring of the entire silver surface. Methanol reacted with subsurface oxygen to produce subsurface hydroxyl species which ultimately formed water in the subsurface layers of silver. The resultant hydrostatic pressure forced the silver surface to adopt a "hill and valley" conformation in order to mininise the surface free energy. Upon approaching typical industrial operating conditions widespread explosions occurred on the catalyst and it was also apparent that the silver surface was extremely mobile under the applied conditions. The interaction of methanol alone with silver resulted in the initial formation of pinholes primarily in the vicinity of defects, due to reaction with oxygen species incorporated in the catalyst during electrochemical synthesis. However, dramatic reduction in the hole concentration with time occurred as all the available oxygen became consumed. A remarkable correlation between formaldehyde production and hole concentration was found.