Using density functional calculations, we demonstrate a catalytic reaction path with activation barriers of less than 0.5 eV for CO oxidation on the neutral and unsupported icosahedral nanoclusters of Au-55, Ag-55, and Au25Ag30. Both CO and O-2 adsorb more strongly on these clusters than on the corresponding bulk surfaces. The reaction path consists of an intermediate involving OOCO complex through which the coadsorption energy of CO and O-2 on these clusters is expected to play an important role in the reaction. Based on the studies for the Au and Ag nanoclusters, a model alloy nanocluster of Au25Ag30 was designed to provide a larger coadsorption energy for CO and O2 and was anticipated to be a better catalyst for CO oxidation from energetic analysis. (C) 2008 American Institute of Physics.