The catalytic activity for ethanol partial oxidation of vanadium oxide (VOx) anchored on titanium oxide was correlated to their electronic structure. In situ Raman spectroscopy and temperature‐programmed desorption (TPD) experiments indicate that the presence of catalytically active VOx moieties is very sensitive to vanadia loading: highly dispersed VOx predominantly exists at low VOx contents whereas larger vanadia clusters coexist at higher VOx loadings. In situ UV/Vis spectroscopy revealed that a significant fraction of these larger clusters remain reduced during catalysis, and thus do not fully participate in catalytic turnovers. The electronic structures of model VOx nanoclusters of different sizes (monomer, dimer, trimer, and one‐dimensional polymers) were investigated by using periodic density functional theoretical calculations. Results indicate that their electronic structures are significantly affected by their size. Our analysis also revealed that the formation of reduced VOx species (V4+) during catalysis is concomitant to the reduction of adjacent Ti cations (Ti3+). Theoretically calculated optical absorption spectra matched the experimental spectroscopic results obtained under in situ reaction conditions. Furthermore, the determination of defect formation enthalpies reported previously as the main descriptor for catalytic activity of vanadia nanoclusters, predicted that isolated monomeric VOx clusters predominantly take part in catalytic turnovers.