We synthesized cerium-doped cobalt-alumina (CoxCey/Al2O3) catalysts for the propane steam reforming (PSR) reaction. Adding cerium introduces oxygen vacancies, and the oxygen transfer capacity of the Ce promoter favors CO to CO2 conversion during PSR, inhibiting coke deposition and promoting hydrogen production. The best PSR activity was achieved at 700 °C using the Co0.85Ce0.15/Al2O3 catalyst, which showed 100% propane (C3H8) conversion and about 75% H2 selectivity, and 6% CO, 5% CO2, and 4% CH4 were obtained. In contrast, the H2 selectivity of the base catalyst, Co/Al2O3, is 64%. The origin of the difference in activity was the lower C3H8 gas desorption temperature of the Co0.85Ce0.15/Al2O3 catalyst compared to that of the Co/Al2O3 catalyst; thus, the PSR occurred at low temperatures. Furthermore, more CO was adsorbed on the Co0.85Ce0.15/Al2O3 catalyst, and subsequently, desorbed as CO2. The activation energy for water desorption from the Co0.85Ce0.15/Al2O3 catalyst was 266.96 kJ/mol, higher than that from Co/Al2O3. Furthermore, the water introduced during the reaction probably reacted with CO on the Co0.85Ce0.15/Al2O3 catalyst, increasing CO2 generation. Finally, we propose a mechanism involving the Co0.85Ce0.15/Al2O3 catalyst, wherein propane is reformed on CoxCey sites, forming H2, and CO, followed by the conversion of CO to CO2 by water on CeO2 sites.