Strong metal–support interaction (SMSI) can lead to formation of suboxide overlayers, coating metal particles and reducing their accessibility. Here, we report that on Ni/MoO₂ an encapsulated Ni@MoO_x structure forms owing to the SMSI effect during reduction and CO₂ hydrogenation reaction, while H₂O vapor treatment dramatically removes the MoO_x overlayer by transforming MoO₂ and Mo₄O₁₁ into MoO₃. This reconstruction facilitates monodentate-formate-mediated CO₂ methanation. The optimized 15Ni/MoO₂ catalyst treated with 50% H₂O vapor switches the selectivity from ∼100% of CO to 98.2% of CH₄. This work establishes an effective strategy for tuning SMSI by H₂O-induced reconstruction to develop CO₂ methanation catalysts.