Small gold nanoclusters in a very narrow size distribution (1.1 ± 0.5 nm) have been stabilized onto multiwalled carbon nanotubes (MWCNT). Theoretical studies supported by XPS and (16)O(2)/(18)O(2) isotopic exchange experiments have shown that, on small gold nanoparticles (0.9-1.5 nm), dissociation of molecular O(2) and formation of a surface oxide-like layer is energetically favorable and occurs at room temperature, while O(2) recombination and desorption involves a larger activation barrier. CO titration experiments and theoretical studies demonstrate that the reactivity of the oxidized particles toward CO does not only depend on particle size but also on oxygen coverage. The oxidation-reduction process described is reversible, and the oxidized nanoparticles are active in the epoxidation of styrene with air.