Reversible exsolution and dissolution of metal nanoparticles (NPs) in complex oxides have been investigated as an efficient strategy to improve the performance and durability of the catalysts for thermal and electrochemical energy conversion. Here, in situ exsolution of Co-Fe alloy NPs from the layered perovskite PrBaFeCoO(5+δ) (PBFC) and their dissolution back into the oxide host have been monitored for the first time by in situ neutron powder diffraction and confirmed by X-ray diffraction and electron microscopy. Catalytic tests for dry reforming of methane showed stable operation over ∼100 h at 800 °C with negligible carbon deposition (<0.3 mg/g(cat) h). The CO(2) and CH(4) conversions are among the highest achieved by layered double perovskites. The cyclability of the PBFC catalyst and the potential to improve the catalytic activity by adjusting the composition, size, and the NP distribution would pave the way for highly efficient energy conversion applications.