Insights into the mechanism of the catalytic cycle for methanol dehydrogenation catalyzed by a highly active PNP pincer ruthenium complex in methanol solvent are presented, using DFT-based molecular dynamics with an explicit description of the solvent, as well as static DFT calculations using microsolvation models. In contrast to previous results, we find the amido moiety of the catalyst to be permanently protonated under catalytic conditions. Solvent molecules actively participate in crucial reaction steps and significantly affect the reaction barriers when compared to pure gas-phase models, which is a direct result of the enhanced solvent stabilization of methoxide anion intermediates. Further, the calculations reveal that this system does not operate via the commonly assumed Noyori-type outer-sphere metal-ligand cooperative pathway. Our results show the importance of incorporating a molecular description of the solvent to gain a deeper and accurate understanding of the reaction pathways, and stress on the need to involve explicit solvent molecules to model complex catalytic processes in a realistic manner.