It is challenging to elucidate the mechanism of CO₂ methanation reaction over nickel-based catalysts and precisely tune the kinetics of rate-determining-step. In this work, we propose a strategy to engineer the oxygen vacancies of nickel-based catalysts for enhanced CO₂ methanation. A Y₂O₃-promoted NiO-CeO₂ catalyst is prepared and found to exhibit an outstanding methanation activity that is up to three folds higher than NiO-CeO₂ and six folds higher than NiO-Y₂O₃ at mild reaction temperatures (<300 °C). We demonstrate both theoretically and experimentally that the introduction of Y₂O₃ to CeO₂ greatly facilitates the generation of surface oxygen vacancies during the reaction. Using spectrokinetics analysis, we further revealed that these sites promote the direct dissociation of CO₂, which is kinetically more favorable than the associative route. Thus, it dramatically improved the CO₂ methanation activity. The vacancy engineering strategy will potentially guide the rational design of a broad range of heterogeneous catalysts for CO₂ hydrogenation.