Transformations of oxygenates (CO2, CO, H2O, etc.) via Mo2C-based catalysts are facilitated by the high oxophilicity of the material; however, this can lead to the formation of oxycarbides and complicate the identification of the (most) active catalyst state and active sites. In this context, the two-dimensional (2D) MXene molybdenum carbide Mo2CTx (Tx are passivating surface groups) contains only surface Mo sites and is therefore a highly suitable model catalyst for structure–activity studies. Here, we report that the catalytic activity of Mo2CTx in Fischer–Tropsch (FT) synthesis increases with a decreasing coverage of surface passivating groups (mostly O*). The in situ removal of Tx species and its consequence on CO conversion is highlighted by the observation of a very pronounced activation of Mo2CTx (pretreated in H2 at 400 °C) under FT conditions. This activation process is ascribed to the in situ reductive defunctionalization of Tx groups reaching a catalyst state that is close to 2D-Mo2C (i.e., a material containing no passivating surface groups). Under steady-state FT conditions, 2D-Mo2C yields higher hydrocarbons (C5+ alkanes) with 55% selectivity. Alkanes up to the kerosine range form, with value of α = 0.87, which is ca. twice higher than the α value reported for 3D-Mo2C catalysts. The steady-state productivity of 2D-Mo2C to C5+ hydrocarbons is ca. 2 orders of magnitude higher relative to a reference β-Μo2C catalyst that shows no in situ activation under identical FT conditions. The passivating Tx groups of Mo2CTx can be reductively defunctionalized also by using a higher H2 pretreatment temperature of 500 °C. Yet, this approach leads to a removal of carbidic carbon (as methane), resulting in a 2D-Mo2C1–x catalyst that converts CO to CH4 with 61% selectivity in preference to C5+ hydrocarbons that are formed with only 2% selectivity. Density functional theory (DFT) results attribute the observed selectivity of 2D-Mo2C to C5+ alkanes to a higher energy barrier for the hydrogenation of surface alkyl species relative to the energy barriers for C–C coupling. The removal of O* is the rate-determining step in the FT reaction over 2D-Mo2C, and O* is favorably removed in the form of CO2 relative to H2O, consistent with the observation of a high CO2 selectivity (ca. 50%). The absence of other carbon oxygenates is explained by the energetic favoring of the direct over the hydrogen-assisted dissociative adsorption of CO.