Gold-supported ceria nanoparticles (CeO x /Au), constituting an inverse system with respect to the more commonly studied ceria-supported gold nanoparticles, were previously identified as an excellent catalyst for water−gas shift reaction, CO oxidation, and steam reforming of methanol. However, the electronic structure and reactivity of such inverse catalysts have not been well understood. To probe the inherent nanoparticle−support interactions and their mechanistic role for the catalytic CO oxidation over this composite catalyst, ab initio molecular dynamics simulations and static density functional theory computations have been carried out for Au(111)-supported ceria clusters (Ce 10 O 20/19 ), as a realistic model system of an inverse CeO x /Au catalyst. We have identified the perimeter of the supported ceria nanoparticle as the most favorable O vacancy formation site; however, the vacancy further migrates to an inner interface site during the thermalization process, simultaneously triggering electron transfer from ceria to Au. Our study shows that the Au(111) surface always withdraws electron density from ceria, irrespective of the chemical environment, namely, in a reducing (Ce 10 O 19 ) as well as oxidizing (Ce 10 O 20 ) environment. To mimic a realistic catalytic environment, CO and O 2 molecules were preadsorbed on the surface of a composite catalyst. We find a vacancy diffusion-assisted Mars−van Krevelen type of reaction mechanism in which the first CO molecule reacts with a lattice O atom of ceria rather than with an activated O 2 2− species, forming CO 2 and leaving one O vacancy behind. This vacancy becomes subsequently refilled by an O atom diffusing from the site of O 2 reaction with a second CO molecule, recovering the stoichiometry of the Ce 10 O 19 cluster and closing the catalytic cycle. Finally, we discuss differences and similarities between ceria/Au and Au n /ceria with respect to surface dynamics, charge transfer between the gold and the oxide phases, and the mechanism of CO oxidation.