Controlling selectivity is a key goal in the design of a heterogeneous catalyst. Herein, we present detailed characterization and activity of silica‐supported cobalt catalysts modified by atomic layer deposition of ZnO. After reduction, the resulting catalysts exhibit substantial selectivity towards alcohol production during CO hydrogenation compared to catalysts containing only cobalt. The prepared catalysts have up to 46 % selectivity toward alcohols with 39 % of the alcohols corresponding to ethanol and other higher alcohols, albeit with reduced activity. In situ characterization of the catalyst by X‐ray diffraction and X‐ray absorption spectroscopy reveals details on the structural evolution in syngas, CO+H2, and shows that ZnO promotion of Co results in the formation of Co2C under catalytic conditions. A mechanism is proposed, supported by density functional theory calculations, which explains Co2C formation by the blocking of Co step sites by Zn species. The ZnO acts a dual promoter both by facilitating Co2C formation and by modifying the resulting Co2C. The Co2C formed from the ZnO‐promoted Co catalysts displays improved thermal stability and selectivity compared with similar Co2C catalysts without Zn.