The gas-phase alkylation of phenol with methanol, a reaction triggered for the production of o-cresol and 2,6-xylenol, is catalysed by MgO-based catalysts. Despite the industrial use of this process, the mechanism of the reaction - which is commonly believed to be based on a classical electrophilic attack of activated methanol onto the aromatic ring - is far from being fully understood. In some previous studies we reported that the reaction intermediate is salicylic alcohol, which is formed by the reaction between the adsorbed phenolate and formaldehyde, the latter being formed in-situ by methanol dehydrogenation. Here we elucidate the following steps of the reaction mechanism, by combining reactivity experiments and DFT calculation, with MgO as a model catalyst. It was found that salicylic alcohol dehydrates into quinone methide, which is then reduced via H-transfer by methanol to o-cresol. Moreover, a dehydrogenation/hydrogenation equilibrium is established between salicylic alcohol and salicylic aldehyde. The methide can also react with methanol to form 2-methoxymethylphenol, which may decompose into o-cresol, thus providing an alternative pathway for the formation of the alkylated compound. (C) 2019 Elsevier Inc. All rights reserved.