The presence of gold is found to promote the development of weakly bonded (CO)ad species over the surface of Au/Fe2O3 catalyst during interaction with carbon monoxide (CO) or a mixture of carbon monoxide and oxygen. The concentration of these species and the nature of the bonding depend on the gold particle size. No such species are formed for gold particles larger than -11 nm or over gold-free iron oxide. The bulk carbonate-like species, formed in the process with the involvement of the hydroxy groups of the support, are merely side products not responsible for the low temperature activity of this catalyst. Thermochemical measurements reveal that the oxidation of carbon monoxide on both Fe2O3 and Au/Fe2O3 occurs via similar redox mechanisms, involving the abstraction and replenishment of lattice oxygen, where the presence of nanosize gold particles promotes these processes. This is attributed to their capacity to adsorb carbon monoxide because of their inherent defective structural sites. It is suggested that the energy that evolves during chemisorption of CO is responsible for the surge in temperature at the Au-Fe2O3 interfaces, which in turn serve as sites for the accelerated reaction between CO and the support. The role of gold particle size is discussed in terms of the effect of geometry of surface metal atoms in the nanosize clusters.