Ceria has recently shown intriguing hydrogenation reactivity in catalyzing alkyne selectively to alkenes. However, the mechanism of the hydrogenation reaction, especially the activation of H2, remains experimentally elusive. In this work, we report the first direct spectroscopy evidence for the presence of both surface and bulk Ce-H species upon H2 dissociation over ceria via in situ inelastic neutron scattering spectroscopy. Combined with in situ ambient-pressure X-ray photoelectron spectroscopy, IR, and Raman spectroscopic studies, the results together point to a heterolytic dissociation mechanism of H2 over ceria, leading to either homolytic products (surface OHs) on a close-to-stoichiometric ceria surface or heterolytic products (Ce-H and OH) with the presence of induced oxygen vacancies in ceria. The finding of this work has significant implications for understanding catalysis by ceria in both hydrogenation and redox reactions where hydrogen is involved.