A confined Ag nanomaterial in the channels of herringbone multi-walled carbon nanotubes (Ag-in/hCNT) was effectively prepared. The space restriction induces morphological changes of Ag nanoparticles into rough nanowires with an estimated aspect ratio of 60 : 8 (nm/nm). Dihydrogen activation is enhanced through the vacancy-enriched wire-like Ag nanocatalyst, as well as the confinement effect. The grain boundaries of Ag and rolled-up graphene layers of CNTs are speculated to play vital roles in the diffusion of activated hydrogen species. The Ag-in/hCNT catalyst exhibits an activity that is three times higher than that of Ag nanoparticles located on the CNT exterior walls in DMO hydrogenation. This finding may insinuate that interplanar spaces provide available access to the external surface of CNTs. Designed experiments further confirm the importance of herringbone CNTs with higher reaction rate than parallel CNTs, and confined Ag produces considerably more activated hydrogen species, thereby benefiting the reduction of surface copper nanoparticles or DMO molecules during hydrogenation. This paper presents a study of the effective utilization of hydrogen over herringbone CNT confined Ag and an understanding of the confinement and promotional catalytic effects.