Authors must supply a graphical abstract at the time the paper is first submitted. The abstract should summarize the contents of the paper in a concise, pictorial form designed to capture the attention of a wide readership and for compilation of databases. Authors must provide images that clearly represent the work described in the paper. The content of the graphical abstract will be typeset and should be kept within an area of 5 cm by 17 cm. Authors must supply the graphic separately as an electronic file. Display omitted •Salicylic alcohol easily converts into o-cresol when feed with methanol onto MgO.•Salicylic alcohol can also disproportionate into o-cresol and salicylic aldehyde.•Both transformations involve the metastable o-methide intermediate.•A à la Mannich Meerwein-Ponndorf-Verley reaction transforms o-methide into o-cresol.•DFT calculations indicate a low barrier for all steps in the cascade. The gas-phase alkylation of phenol with methanol, a reaction triggered for the production of o-cresol and 2,6-xylenol, is catalysed by MgO-based catalysts. Despite the industrial use of this process, the mechanism of the reaction – which is commonly believed to be based on a classical electrophilic attack of activated methanol onto the aromatic ring – is far from being fully understood. In some previous studies we reported that the reaction intermediate is salicylic alcohol, which is formed by the reaction between the adsorbed phenolate and formaldehyde, the latter being formed in-situ by methanol dehydrogenation. Here we elucidate the following steps of the reaction mechanism, by combining reactivity experiments and DFT calculation, with MgO as a model catalyst. It was found that salicylic alcohol dehydrates into quinone methide, which is then reduced via H-transfer by methanol to o-cresol. Moreover, a dehydrogenation/hydrogenation equilibrium is established between salicylic alcohol and salicylic aldehyde. The methide can also react with methanol to form 2-methoxymethylphenol, which may decompose into o-cresol, thus providing an alternative pathway for the formation of the alkylated compound.