In order to avoid the high cost of existing precious metal catalyst like Pt, Ag/CeO2 was the most promising catalysts for mobile source soot emission control technologies, but there was a clear trade-off between hydrothermal aging resistance and catalytic oxidation performance hindered the application of this catalyst. In order to reveal the hydrothermal aging mechanism of Ag/CeO2 catalysts, the TGA (thermogravimetric analysis) experiments were investigated to reveal the mechanism of Ag modification on catalytic activity of CeO2 catalyst between fresh and hydrothermal aging and were also characterized with the related characterization experiments to in-depth research the lattice morphology and valence changes. The degradation mechanism of Ag/CeO2 catalysts in vapor with high-temperature was also explained and demonstrated based on density functional and molecular thermodynamics theories. The experimental and simulation data showed that the catalytic activity of soot combustion within Ag/CeO2 decreased more significantly after hydrothermal aging than CeO2 due to the less agglomerated, which caused by the decreased in OII/OI and Ce3+/Ce4+ compared with CeO2. As shown in density function theory (DFT) calculation, the decreased surface energy and the increased oxygen vacancy formation energy of the low Mille index surface after Ag modification led to the instability structure and the high catalytic activity. Ag modification also increased the adsorption energy and Gibbs free energy of H2O on the low Miller index surface compared to CeO2, indicating that the desorption temperature of H2O molecules in (1 1 0) and (1 0 0) was higher than (1 1 1) in CeO2 and Ag/CeO2, which led to the migration of (1 1 1) crystal surfaces to (1 1 0) and (1 0 0) in the vapor environment. These conclusions can provide a valuable addition to the regenerative application of Ce-based catalysts in diesel exhaust aftertreatment system the aerial pollution.