Ceria is an important rare earth metal oxide for numerous catalytic applications. In the present work, a combined study of structural characterization and catalytic activity of nanocrystalline Ce-Gd-O mixed oxides was thoroughly investigated towards CO oxidation. The Ce-Gd mixed oxides with different Gd-doping amounts (10 and 20 mol% Gd with respect to Ce) were prepared by means of an economical and simple coprecipitation method with aqueous NH3 solution as the precipitant. The resulting samples were treated at different calcination temperatures to evaluate their structural homogeneity and thermal stability. An extensive physicochemical characterization was done by means of XRD, Raman, TEM, BET analysis, H-2-TPR, XPS, and UV-Vis DRS techniques. XRD studies revealed the formation of nanocrystalline single phase Ce-Gd solid solutions. Raman studies further disclosed the formation of Ce-Gd solid solutions associated with deformed F-2g band and additional bands pertaining to oxygen vacancy defects. The Gd-doping remarkably reduced the CeO2 crystallite size, which is in nanoscale range as evidenced by TEM images. The BET surface area and oxygen vacancy defects of CeO2 were significantly enhanced after Gd3+ incorporation. The ability of CeO2 to store and release of oxygen (oxygen storage capacity, OSC) is markedly improved 3 and 4 times for Ce0.9Gd0.1O2-delta and Ce0.8Gd0.2O2-delta samples, respectively. Among the investigated catalysts, the Ce0.8Gd0.2O2-delta sample calcined at 773 K showed better catalytic activity due to smaller crystallite size, higher BET surface area, enhanced reducible nature, and superior OSC. It is found that the catalytic performance of the Ce-Gd sample strongly depends on the Gd-loading and calcination temperature.