The CO + NO reaction (2CO + 2NO - N-2 + 2CO(2)) on small size-selected palladium clusters supported on thin MgO(100) films reveals distinct size effects in the size range Pd-n with n less than or equal to 30. Clusters up to the tetramer are inert, while larger clusters form CO2 at around 300 K, and this main reaction mechanism involves adsorbed CO and an adsorbed oxygen atom, a reaction product from the dissociation of NO. In addition, clusters consisting of 20-30 atoms reveal a low-temperature mechanism observed at temperatures below 150 K; the corresponding reaction mechanism can be described as a direct reaction of CO with molecularly adsorbed NO. Interestingly, for all reactive cluster sizes, the reaction temperature of the main mechanism is at least 150 K lower than those for palladium single crystals and larger particles. This indicates that the energetics of the reaction on clusters are distinctly different from those on bulklike systems. In the presented one-cycle experiments, the reaction is inhibited when strongly adsorbed NO blocks the CO adsorption sites. In addition, the obtained results reveal the interaction of NO with the clusters to show differences as a function of size; on larger clusters, both molecularly bonded and dissociated NO coexist, while on small clusters, NO is efficiently dissociated, and hardly any molecularly bonded NO is detected. The desorption of N-2 occurs on the reactive clusters between 300 and 500 K.