This study investigates the formation and activity of noble metal clusters on CeO₂-supported catalysts for CO oxidation. By using a mixed CeO₂-Al₂O₃ support, the local concentration of Pd is increased on CeO₂ islands, promoting the in situ formation of small Pd clusters at a low noble metal loading (0.5 wt%). This approach prevents the full redispersion or formation of larger noble metal particles, maintaining high CO oxidation activity at low temperatures. The spatial separation of CeO₂ islands on Al₂O₃ confines the mobility of Pd, enhancing the stability of the catalyst under thermal aging conditions. The active species for CO conversion are identified as small PdOx clusters on CeO₂ islands, which are stabilized by the interaction with ceria and the participation of oxygen at the interface. This study demonstrates a promising method for designing catalysts with reduced noble metal loading and improved performance.This study investigates the formation and activity of noble metal clusters on CeO₂-supported catalysts for CO oxidation. By using a mixed CeO₂-Al₂O₃ support, the local concentration of Pd is increased on CeO₂ islands, promoting the in situ formation of small Pd clusters at a low noble metal loading (0.5 wt%). This approach prevents the full redispersion or formation of larger noble metal particles, maintaining high CO oxidation activity at low temperatures. The spatial separation of CeO₂ islands on Al₂O₃ confines the mobility of Pd, enhancing the stability of the catalyst under thermal aging conditions. The active species for CO conversion are identified as small PdOx clusters on CeO₂ islands, which are stabilized by the interaction with ceria and the participation of oxygen at the interface. This study demonstrates a promising method for designing catalysts with reduced noble metal loading and improved performance.