The oxidation of methanol to formaldehyde on silica supported vanadium oxide is studied by density functional theory. For isolated vanadium oxide species silsesquioxane-type models are adopted. The first step is dissociative adsorption of methanol yielding CH3O(O=)V(O-)(2) surface complexes. This makes the O=V(OCH3)(3) molecule a suited model system. The rate-limiting oxidation step involves hydrogen transfer from the methoxy group to the vanadyl oxygen atom. The transition state is biradicaloid and needs to be treated by the broken-symmetry approach. The activation energies for O=V(OCH3)(3) and the silsesquioxane surface model are 147 and 154 kJ/mol. In addition, the (O= V(OCH3)(3))(2) dimer (a model for polymeric vanadium oxide species) and the O=V(OCH3)(3)(center dot+) radical cation are studied. For the latter the barrier is only 80 kJ/mol, indicating a strong effect of the charge on the energy profile of the reaction and questioning the significance of gas-phase cluster studies for understanding the activity of supported oxide catalysts.