Electroless functionalization of cerium oxide nanoparticles (NPs) based on the grafting of aryl groups from the reduction of diazonium salts is presented as a useful and facile method for enhancing the properties of the NPs. For this study, 4-methyl-, 4-ethyl-, and 4-n-butyl-benzene diazonium salts were used as model molecules to demonstrate the ability to change the hydrophobic properties of the cerium oxide (CeO2) NPs. The grafting reaction was investigated under two reducing environments: the addition of a chemical reducing agent and the use of cerium oxide's native reducing property. Spectroscopic evidence for the successful attachment of aryl groups to the CeO2 NPs was given by infrared and C-13 SS-NMR, which clearly detect characteristic aryl C-C peaks and the alkyl chains. X-ray diffraction results confirmed that the NPs underlying the crystal structure was unaffected by the grafting process. Thermal gravimetric analysis of the NPs suggested that this method enables the formation of multilayers at the surface, as well as an increase in the hydrophobic character. Hydrophobic properties of the resultant NPs further examined with a water contact angle test on pressed pellets revealed increase in hydrophobicity with increasing alkyl chain length. This research opens up new possibilities for controlling the surface chemical composition of CeO2 NPs as well as other NPs using procedures operated in aqueous environments at room temperature.