Effects of framework and near surface composition of quinternary, phase-pure M1 MoVTeNb oxide catalysts on their catalytic performance in selective oxidation of propane to acrylic acid have been studied. The catalysts were prepared by hydrothermal synthesis, spray-drying, and superheated water vapor treatment. Electron microscopy, chemical analysis, nitrogen physisorption, and in situ photoelectron spectroscopy have been used to characterize the materials. The yield of acrylic acid normalized to the specific surface area of the catalyst increases with decreasing percentage of Mo and increasing molar ratio of Te/V at the surface. The metal stoichiometry at the surface differs from the stoichiometry in the crystalline bulk and changes in response to the composition of the gas phase. In situ valence band spectroscopy at 623 K in the presence of all reactants revealed a substantial covalent character of the metal-oxygen bonds in M1. The surface restructuring under formation of V- and Te-containing clusters anchored on crystalline, semiconducting M1 is, therefore, considered to establish structurally and electronically isolated active sites. The mobility of Te especially in the presence of water vapor may contribute to the development of site isolation under reaction conditions and to the enhanced selectivity to acrylic acid in the presence of steam in the feed.