Catalytic oxidation of formaldehyde (HCHO) at ambient temperature represents a cost-effective and efficient strategy for indoor HCHO removal. Although precious metal-based catalysts have been considered practical for oxidizing gaseous HCHO indoors, the limited activity of Ag-based catalysts can be attributed to their typical +1 and 0 valence states, as well as their single electron transport pathway. This characteristic impedes the reestablishment of the low state during oxygen activation, thereby resulting in catalyst deactivation. The present study successfully incorporated Ag atoms into manganese-cobalt layered double hydroxide (MnCoLDH) through doping, resulting in the development of a catalyst that exhibited complete formaldehyde oxidation activity at 30 °C. Lattice-confined Ag enables continuous activation of oxygen, while LDH facilitates the sustained provision of surface hydroxyl groups. The roles and mechanisms of surface hydroxyl groups, adsorbed oxygen, and lattice oxygen in the oxidation of formaldehyde were investigated using in-situ DRIFTS. By comparing Ag with the impregnation method, the confinement of Ag within the lattice enables continuous activation of oxygen. This study presents a viable strategy for designing efficient catalysts for volatile organic compounds (VOCs) removal by utilizing active lattice oxygen species.