Direct carbon solid oxide fuel cells (DC-SOFCs) are high-efficiency and clean power generation systems that can directly utilize solid carbon to produce electricity. However, the cell performance is hampered by the sluggish kinetics of the reverse Boudouard reaction at operating temperatures, as dictated by their operational principle. Here, carbon fuels loaded with varying amounts of MgO catalyst were successfully developed to promote the reverse Boudouard reaction and DC-SOFC performance. At 850 °C, the DC-SOFC powered by 5 wt% Mg-loaded activated carbon achieved peak power output of 236 mW cm−2, demonstrating a notable enhancement of 41.3% compared to that of 165 mW cm−2 in pure activated carbon-fueled cell. Furthermore, the single cell discharged stably for a prolonged duration of 41.6 h under 50 mA, achieving a noteworthy fuel utilization of 33.3% at 850 °C. These underscored the substantial contribution of MgO to the enhancement of DC-SOFC performance and efficiency. More importantly, the MgO catalyst displayed excellent stability without agglomeration during the high-temperature operation of the cell. Density functional theory simulation confirmed experimental findings that MgO reduced the energy barrier of carbon gasification reaction, thereby providing sufficient carbon oxide for cell operation. Finally, the reaction paths and internal mechanism of MgO-catalyzed carbon gasification were proposed to offer theoretical backing for the effective conversion of solid carbon fuel and improvement of cell performance. This study offers original perspectives on advancing carbon gasification reaction catalysts to facilitate the stable and highly efficient operation of DC-SOFCs, contributing to reduced carbon emissions and advancing sustainability.