During CO2 methanation, the generation of H2O as a by-product can lead to its strong adsorption on the catalyst's active sites, potentially blocking them or altering the active phase, thereby degrading catalytic performance. To mitigate this inhibition effect by water, we introduce a hydrophobic surface via stearic acid treatment to rapidly remove H2O formed during CO2 methanation over NiAl mixed metal oxide (MMO)-derived catalysts. The crystal structure of NiAl MMO and the average Ni particle size of similar to 13 nm remain unaltered by the hydrophobic treatment. The NiAl catalyst treated with an optimal concentration of stearic acid shows a nearly doubled CO2 conversion of 61.4% at 275 degrees C, compared to the pristine catalyst, and this high activity is sustained for over 100 h without deactivation. However, excessive stearic acid coverage inhibits CO2 adsorption significantly, causing a sharp drop in CO2 conversion to 10.8%. This study demonstrates that hydrophobic surface modification can effectively ameliorate catalyst deactivation due to by-product H2O, which could be applied to many other catalytic reactions where H2O acts as an inhibiting by-product.