The aerobic oxidation of methanol to formic acid catalyzed by Au(20)(-) has been investigated quantum chemically using density functional theory with the M06 functional. Possible reaction pathways are examined taking account of full structure relaxation of the Au(20)(-) cluster. The proposed reaction mechanism consists of three elementary steps: (1) formation of formaldehyde from methoxy species activated by a superoxo-like anion on the gold cluster; (2) nucleophilic addition by the hydroxyl group of a hydroperoxyl-like complex to formaldehyde resulting in a hemiacetal intermediate; and (3) formation of formic acid by hydrogen transfer from the hemiacetal intermediate to atomic oxygen attached to the gold cluster. A comparison of the computed energetics of various elementary steps indicates that C-H bond dissociation of the methoxy species leading to formation of formaldehyde is the rate-determining step. A possible reaction pathway involving single-step hydrogen abstraction, a concerted mechanism, is also discussed. The stabilities of reactants, intermediates and transition state structures are governed by the coordination number of the gold atoms, charge distribution, cooperative effect and structural distortion, which are the key parameters for understanding the relationship between the structure of the gold cluster and catalytic activity in the aerobic oxidation of alcohols.