Solid oxide fuel cells (SOFCs) stand out in sustainable energy systems for their unique ability to efficiently utilize hydrocarbon fuels, particularly those from carbon‐neutral sources. CeO2−δ (ceria) based oxides embedded in SOFCs are recognized for their critical role in managing hydrocarbon activation and carbon coking. However, even for the simplest hydrocarbon molecule, CH4, the mechanism of electrochemical oxidation at the ceria/gas interface is not well understood and the capability of ceria to electrochemically oxidize methane remains a topic of debate. This lack of clarity stems from the intricate design of standard metal/oxide composite electrodes and the complex nature of electrode reactions involving multiple chemical and electrochemical steps. This study presents a Sm‐doped ceria thin‐film model cell that selectively monitors CH4 direct‐electro‐oxidation on the ceria surface. Using impedance spectroscopy, operando X‐ray photoelectron spectroscopy, and density functional theory, it is unveiled that ceria surfaces facilitate C─H bond cleavage and that H2O formation is key in determining the overall reaction rate at the electrode. These insights effectively address the longstanding debate regarding the direct utilization of CH4 in SOFCs. Moreover, these findings pave the way for an optimized electrode design strategy, essential for developing high‐performance, environmentally sustainable fuel cells.