Methane (CH4) oxidation to high value chemicals under mild conditions through photocatalysis is a sustainable and appealing pathway, nevertheless confronting the critical issues regarding both conversion and selectivity. Herein, under visible irradiation (420 nm), the synergy of palladium (Pd) atom cocatalyst and oxygen vacancies (OVs) on In2O3 nanorods enables superior photocatalytic CH4 activation by O2. The optimized catalyst reaches ca. 100 μmol h−1 of C1 oxygenates, with a selectivity of primary products (CH3OH and CH3OOH) up to 82.5%. Mechanism investigation elucidates that such superior photocatalysis is induced by the dedicated function of Pd single atoms and oxygen vacancies on boosting hole and electron transfer, respectively. O2 is proven to be the only oxygen source for CH3OH production, while H2O acts as the promoter for efficient CH4 activation through ·OH production and facilitates product desorption as indicated by DFT modeling. This work thus provides new understandings on simultaneous regulation of both activity and selectivity by the synergy of single atom cocatalysts and oxygen vacancies.