Understanding the dynamic evolution of structural changes in catalysts at the atomic level under controlled reaction conditions is one of the most challenging areas in heterogeneous catalysis. Here we present aberration-corrected environmental TEM at the atomic level and electron diffraction of the reduction of model Co3O4 catalysts in H2 to directly observe the dynamic phase evolution in the reduction process. New insights into the reduction of Co3O4 to the intermediate CoO include the formation of an advancing atomic scale interface between Co3O4 and CoO regions. The interface penetrates further into the Co3O4 crystal, with the CoO regions replacing the previous Co3O4 structure, with increasing reduction. The reduction to CoO proceeds at approximately 200 °C at rounded edges containing atomic steps on the surfaces. The interfaces are observed in crystals larger than approximately 15 nm in size but not in smaller crystals, which indicates the rapid reduction of smaller nanoparticles. The most dramatic changes are observed at 350 °C in larger crystals of size 50 nm.