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Using methane as a reagent to synthesize high-value chemicals and high-energy density fuels through C−C coupling has attracted intense attention in recent decades, as it avoids completely breaking all C−H bonds in CH4. In the present study, we demonstrated that the coupling of HCHO with the CH3 species from CH4 activation to produce ethanol can be accomplished on the single Pd atom−In2O3 catalyst based on the results of density functional theory (DFT) calculations. The results show that the supported single Pd atom stabilizes the CH3 species following the activation of one C−H bond of CH4, while HCHO adsorbs on the neighboring In site. Facile C−C coupling of HCHO with the methyl species is achieved with an activation barrier of 0.56 eV. We further examined the C−C coupling on other single metal atoms, including Ni, Rh, Pt, and Ag, supported on In2O3 by following a similar pathway and found that a balance of the three key steps for ethanol formation, i.e., CH4 activation, C−C coupling, and ethoxy hydrogenation, was achieved on Pd/In2O3. Taking the production of acetaldehyde and ethylene on the Pd/In2O3 catalyst into consideration, the DFT-based microkinetic analysis indicates that ethanol is the dominant product on the Pd/In2O3 catalyst. The facile C−C coupling between HCHO and dissociated CH4 makes formaldehyde a potential C1 source in the conversion and utilization of methane through an energy- and atom-efficient process.