Periodic density functional theory (DFT) calculations have been used to unravel the mechanism of the NO reduction by CO (NO + CO -> N-2 + CO2) on clean and hydrogen covered gold based catalysts. The effects caused by the presence of low-coordinated atoms on the catalyst were taken into consideration by using the stepped Au(321) surface. A careful analysis of several reaction mechanisms was made and it is concluded that if hydrogen species are not available on the catalyst surface, the N-O bond cleavage will proceed through the ON2O and N2O intermediates while CO reacts directly with formed oxygen adatoms. If hydrogen species are available on the catalyst, the reaction will occur via the NOH and N2O intermediates. However, the reaction has to compete with a more favorable route, where NH3 instead of N-2 is obtained after formation of NOH and NHxOH intermediates. The calculations agree also with the experimental observation of the NCO intermediate species which is formed without energy cost from combination of CO and N fragments. The NCO species is very probably a spectator at moderate temperatures since its evolution toward N-2 and CO2 is less favorable than other possible routes studied in this work. Finally, calculated reaction rate constants at three different temperatures show that most of the reactions studied are only possible at moderately high temperature. (C) 2012 Elsevier Inc. All rights reserved.