The reactions of water with a number of iridium(iii) complexes relevant to the mechanism for catalytic methanol carbonylation are reported. The iridium acetyl, [Ir(CO)2I3(COMe)]-, reacts with water under mild conditions to release CO2 and CH4, rather than the expected acetic acid. Isotopic labeling and kinetic experiments are consistent with a mechanism involving nucleophilic attack by water on a terminal CO ligand of [Ir(CO)2I3(COMe)]- to give an (undetected) hydroxycarbonyl species. Subsequent decarboxylation and elimination of methane gives [Ir(CO)2I2]-. Similar reactions with water are observed for [Ir(CO)2I3Me] -, [Ir(CO)2(NCMe)I2(COMe)] and [Ir(CO) 3I2Me] with the neutral complexes exhibiting markedly higher rates. The results demonstrate that CO2 formation during methanol carbonylation is not restricted to the conventional water gas shift mechanism mediated by [Ir(CO)2I4]- or [Ir(CO)3I3], but can arise directly from key organo-iridium(iii) intermediates in the carbonylation cycle. An alternative pathway for methane formation not involving the intermediacy of H2 is also suggested. A mechanism is proposed for the conversion MeOH + CO → CO2 + CH4, which may account for the similar rates of formation of the two gaseous by-products during iridium-catalysed methanol carbonylation.