The so-called M1 phase (the common formula (TeO)x(Mo, V, Nb)5O14) is a very promising catalyst for ethane oxidative dehydrogenation (ODE). It shows 90% selectivity to ethylene at 78% ethane conversion (400 °C, contact time-5.5 s). The active crystal structure is formed under certain synthetic conditions in VMoNbTe mixed oxides. This paper is devoted to the analysis of how the local and average structure of the M1 phase is developed during the synthesis and what happens at particular synthetic steps. The analysis of the local structure was performed using the EXAFS and pair distribution function (PDF) methods. The EXAFS analysis of the initial VMoTe water solution and VMoNbTe slurry showed that Anderson-type heteropoly anions are formed in the solution and are preserved after fast spray-drying of the slurry. Nb cations do not enter the structure of the polyanions, but form an extended hydrated oxide matrix, where distorted NbO6 and NbO7 polyhedrons are connected to each other. The hydrated oxide matrix with captured polyanions provides the compositional homogeneity of the precursor. The distances in the second coordination shell are redistributed after thermal treatment at 310 °C. After being heated at T > 350°, the local structure of the M1 phase is organized and pentagonal domains are formed. These domains consist of a NbO7 pentagonal bipyramid and five MeO6 adjacent octahedra (Me = Mo, V). In the first stages, the building blocks are stacked along the  direction. The crystallization process results in the connection of the pentagonal domains to the extended polygonal grid. The formation of the regular grid with TeOx containing channels is accompanied by the increase in ethane conversion and ethylene selectivity of the catalysts.