CeO2 nanoparticles have been prepared by gel combustion method. The as-prepared nanoparticles were calcined at 500, 550 and 600 degrees C. The crystallite size of the nanoparticles has been determined using X-ray diffraction. Catalytic activity has been studied by measuring the Tafel slope in oxygen reduction reaction in cyclic voltammetery. The nanoparticles samples showed higher catalytic activity than bulk ceria sample. Surprisingly, smaller size nanoparticles with large surface area showed less catalytic activity than larger size nanoparticles. Positron annihilation, X-ray photo electron spectroscopy and photoluminescence studies indicated the presence of oxygen vacancies as well as larger surface defects. It has been found that surface defect concentration increased with the increase in calcination temperature and the catalytic activity of the nanoparticles is directly correlated to the surface defect concentrations. (C) 2017 Elsevier B.V. All rights reserved.