Water influences critically the kinetics of the autocatalytic conversion of methanol to hydrocarbons in acid zeolites. At very low conversions but otherwise typical reaction conditions, the initiation of the reaction is delayed in presence of H2O. In absence of hydrocarbons, the main reactions are the methanol and dimethyl ether (DME) interconversion and the formation of a C1 reactive mixture-which in turn initiates the formation of first hydrocarbons in the zeolite pores. We conclude that the dominant reactions for the formation of a reactive C1 pool at this stage involve hydrogen transfer from both MeOH and DME to surface methoxy groups, leading to methane and formaldehyde in a 1:1 stoichiometry. While formaldehyde reacts further to other C1 intermediates and initiates the formation of first C-C bonds, CH4 is not reacting. The hydride transfer to methoxy groups is the rate-determining step in the initiation of the conversion of methanol and DME to hydrocarbons. Thus, CH4 formation rates at very low conversions, i.e., in the initiation stage before autocatalysis starts, are used to gauge the formation rates of first hydrocarbons. Kinetics, in good agreement with theoretical calculations, show surprisingly that hydrogen transfer from DME to methoxy species is 10 times faster than hydrogen transfer from methanol. This difference in reactivity causes the observed faster formation of hydrocarbons in dry feeds, when the concentration of methanol is lower than in presence of water. Importantly, the kinetic analysis of CH4 formation rates provides a unique quantitative parameter to characterize the activity of catalysts in the methanol-to-hydrocarbon process.