Ethanol synthesis from syngas via dimethyl oxalate (DMO) hydrogenation is of crucial importance for environment- and energy-related applications. Herein, we designed the bifunctional Cu nanoparticle (NP) inlaid mesoporous Al2O3 catalyst and first applied it to ethanol synthesis with high efficiency. The catalyst was made based on the spatial restriction strategy by pinning the Cu NPs on mesoporous Al2O3 to conquer the sintering problem and facilitate the stability (>200 h at 270 °C), which has potential values in high-temperature and exothermic reactions. The plentiful pores, highly exposed and properly assembled Cu-acid sites, furnished the catalyst with high ethanol yield (∼94.9%). A structure-sensitive behavior that the intrinsic activity increases with the decreasing NP size was discussed. It was attributed to the change in metal–acid interfacial sites, morphology, and electronic structure and balance of surface Cu0–Cu+ species. The mechanism for DMO hydrogenation to ethanol involving activation of CO, C–O, and O–H bands was also proposed. As cleavage of these bonds is a versatile tool to utilize bioderived molecules (e.g., polyols), the bifunctional catalysts can also be applied to hydrogenolysis of C–O bonds or etherification of O–H groups to produce various chemicals.