Cu nanoparticles of size 5-10 nm supported on MgÀ Al mixed oxide were prepared by the sol-gel method. Cu loading was varied from 2.5 to 10 wt % on the support to investigate the effect on particle size and activity/selectivity of the catalyst. The Cu/MgÀ Al catalysts containing small copper nanoparticles favor high selectivity of methanol, while the rate of CO formation was higher for larger copper particles. The high methanol selectivity (~99 %) and methanol formation rate (0.016 mol g Cu À 1 h À 1 ) over the 4.8Cu/MgÀ Al catalyst was due to the combined effect of the presence of high Cu dispersion, Cu surface area, and strong interaction between small Cu particles with MgÀ Al support. The high stability of the catalyst was attributed to the strong binding of the Cu cluster (À 179.7 kJ/mol) to the MgO/γ-Al 2 O 3 support, as shown by the DFT study. Additionally, the adsorption energy calculated using DFT showed preferential adsorption of CO 2 and H 2 at the Cu/MgO(100) active site (À 120.9 kJ/mol, À 130.4 kJ/mol) compared to the Cu/γ-Al 2 O 3 (100) (À 64.2 kJ/mol, À 85.7 kJ/mol)active site. The high selectivity of the catalyst towards methanol can be attributed to the higher stability of the formate (HCOO) intermediate (À 257.2 kJ/mol) compared to the carboxylate (COOH) intermediate (À 131.0 kJ/mol).