An investigation of the nature of adsorption of H2O and CO2 on a nitrogen doped zinc oxide cluster surface and the resultant reaction between them has been performed using hybrid density functional theory (DFT) calculations at the B3LYP level of theory in a vacuum. The stable chemisorption modes of CO2 and H2O on metal, oxygen and nitrogen sites were examined. The calculated adsorption energies reveal that the formation of CO2- attached to N is the most favorable process for CO2 on the Zn18O17:N cluster surface, with a binding energy of -1.86 eV. The water molecule spontaneously dissociates on the same surface to produce chemisorbed H∗ and∗OH with an interaction energy of -0.77 eV. The model calculations rationalize the hydrogenation of CO2 by H2 generated from H2O on the cluster surface. Thermodynamically favorable reaction pathways for the formation of methanol on the catalytic surface in a vacuum were proposed. Among the three pathways, methanol formation follows the carbamate route. The carbamate formed undergoes hydrogenation to generate COOH∗ units, followed by its exothermic decomposition to∗CO attached to N and∗OH. Further hydrogenation of CO ultimately yields methanol. All of the above steps were computationally evaluated. © The Royal Society of Chemistry 2015.