The methane activation and methane dry reforming reactions were studied and compared over 4 wt % Ni/CeO2 and 4 wt % Ni/CeZrO2 (containing 20 wt % Zr) catalysts. Upon the incorporation of Zr into the ceria support, the catalyst exhibited a significantly improved activity and H2 selectivity. To understand the effects of the Zr dopant on Ni and CeO2 during the dry reforming of methane (DRM) reaction and to probe the structure–reactivity relationship underlying the enhanced catalytic performance of the mixed-oxide system, in situ time-resolved X-ray diffraction (TR-XRD), X-ray absorption fine structure (XAFS), and ambient-pressure X-ray photoelectron spectroscopy (AP-XPS) were employed to characterize the catalysts under reaction conditions. TR-XRD and AP-XPS indicate that ceria–zirconia supported Ni (Ni/CeZrO2) is of higher reducibility than the pure ceria supported Ni (Ni/CeO2) upon the reaction with pure CH4 or for the methane dry reforming reaction. The active state of Ni/CeZrO2 under optimum DRM conditions (700 °C) was identified as Ni0, Ce3+/Ce4+, and Zr4+. The particle size of both nickel and the ceria support under reaction conditions was analyzed by Rietveld refinement and extended XAFS fitting. Zr in the ceria support prevents particle sintering and maintains small particle sizes for both metallic nickel and the partially reduced ceria support under reaction conditions through a stronger metal–support interaction. Additionally, Zr prevents Ni migration from the surface into ceria forming a Ce1–xNixO2–y solid solution, which is seen in Ni/CeO2, thus helping to preserve the active Ni0 on the Ni/CeZrO2 surface.