We have elucidated the mechanism of CO oxidation catalyzed by AlAun (n = 1-3) clusters through first-principle density-functional theory (DFT) calculations. It is found that these subnanometer species transform into reaction complexes which catalyze CO oxidation through a variety of different mechanisms, occurring via both Langmuir-Hinshelwood and Eley-Rideal paths. It is shown that mixing two different metals (Al and Au) can have beneficial effects on the catalytic activity and the alloyed AlAu2 cluster is proposed as the best effective nanocatalyst. (C) 2014 Elsevier B.V. All rights reserved.