To gain atomic level understanding of active sites in a multi-functional catalytic process, we have investigated MgAl hydrotalcite (HT) based catalyst that exhibits promising conversion of bioethanol to high value C4 compounds. The ethanol to higher alcohol conversion goes through multitude of intermediate steps and the reaction pathway depends on chemical and electronic nature of active sites in the material. In particular, addition of copper is expected to promote the catalytic dehydrogenation of alcohols to aldehydes which is the first step in the complex cascade reaction and considered as the rate determining step of the catalytic process. In this study, we studied the concentration dependent dispersion of copper active sites in the MgAl matrix and its relation to catalytic performance. Catalysis experiments were carried out in an indigenously designed plug flow reactor to understand the selectivity and efficiency of copper substituted catalysts during the conversion of ethanol to higher alcohols. Structural, chemical and electronical changes in copper substituted catalysts were studied before and after the catalytic reaction using high resolution transmission electron microscopy (TEM), X-ray diffraction (XRD) and in-situ X-ray absorption – in particular X-ray absorption near edge structure (XANES) analysis. It was observed that different oxidation states of copper and the extent of dispersion of copper in the HT matrix influences catalytic efficiency and selectivity of the process by promoting various side reactions. Synthesis of copper substituted HT derived mixed oxide catalyst plays a major role in controlling the dispersion of the copper in the matrix. Fundamental challenges in achieving higher copper substitution without significant clustering and aggregation effects will be discussed in context of catalytic selectivity and efficiency.