Infrared (IR) spectroscopy revealed that dimethyl ether (DME) undergoes partial dissociation on pure and rhodium‐containing CeO2 at 300 K to yield methoxy and methyl species. This process is promoted by the presence of rhodium. By means of thermal desorption measurements (TPD), the adsorption of DME on Rh/CeO2 at 300 K and subsequent decomposition of DME (Tp≈370 K), releasing H2, CO, CO2, and CH4, with Tp between 420 and 673 K, were ascertained. Rh/CeO2 is an effective catalyst for the decomposition of DME to give H2 (29–35 %), CO (27–30 %) and CH4 (32–38 %) as major products with complete conversion at 673–723 K. Adding water to DME changed the product distribution and increased the selectivity of H2 formation from 30–35 % to 58 % at 723 K. In situ IR spectroscopy showed absorption bands of CO at 2034 and 1893 cm−1 during the reaction at 673–773 K. Deactivation of the catalyst did not occur at 773 K during the time measured (approximately 10 h). Rh deposited on carbon Norit also exhibited a high activity towards the decomposition of DME, but the selectivity towards hydrogen was lower.