A Cu-ZnO-Al2O3 catalyst prepared using the oxalate coprecipitation process was subjected to in situ reduction using hydrazine in order to get variable amounts of Cu(0) Cu(+1), and Cu(+2) in the catalyst. The-effect of the Cu-oxidation state in the catalyst on its activity clearly indicated that easily reducible Cu(+2) species are responsible for creating a high Cu-metal area and thereby a high methanol yield and the presence of Cu(+1) crystallites in the fresh catalyst results in an inferior methanol yield. The CO2 desorbed amounts in the low temperature regions were in line with the Cu-metal area. Therefore, it would appear that the easily reducible CuO sites can adsorb and desorb CO2 at low temperatures and these common sites are responsible for creating a Cu-metal area and thereby methanol production from CO2 hydrogenation. However, the presence of ZnO ina poorly crystalline state is active for CO2 hydrogenation yet, enhances the RWGS reaction rather than methanol formation.