A series of Cu-ZrO2 samples with varying concentrations of Cu from 1 to 33 mol% have been prepared by sol-gel technique and calcined at 873 K. XRD characterization of the samples with a copper content of 2 to 20 mol% reveals the stabilization of zirconia into cubic (fluorite) phase. The Cu-ZrO2 samples with higher Cu content (> 20 mol%) revealed the presence of bulk CuO. A linear decrease in lattice parameter with increase in Cu content up to 20 mol% indicates the possible incorporation of CU2+ , the lattice position of Zr4+ ions, XPS data of these samples provide further evidence for the incorporation of Cu2+ ions in the ZrO2 lattice up to 5 mol%. At higher concentrations of Cu, about half of the input of Cu goes into the lattice and the remaining stays as extra lattice Cu, possibly on the surface or subsurface layer of ZrO2. The BET surface area of these samples was in the range of 2 to 8 m(2) g(-1). The activity of these samples in CH4 and CO oxidation was investigated by O-18-isotope exchange as well as by catalytic reaction studies in complete oxidation of CH4 and CO. The Cu-ZrO2 with 20 mol% Cu was found to be the most active sample in the series, which has the maximum amount of copper in the substitutional position. For comparison, yttrium-stabilized zirconia samples with and without Cu was also prepared following the same procedure. Yttrium-stabilized zirconia without Cu was almost inactive in complete methane oxidation, whereas Cu-containing sample was more active. This confirms that the presence of Cu species in substitutional positions along with oxygen vacancies in zirconia lattice are substantially responsible for the catalytic activity in CH4 and CO oxidation as well as in complete heterogeneous O-18 exchange processes. The light-off temperature for 50% conversion of CH4 (T-50) decreases with an increase in Cu content up to 20 mol% and matches well with the results of O-18 exchange measurements. The shapes of the curves of T-50 and T-exchange follow a similar trend indicating that both CH4 oxidation and O-18 exchange processes occur via a completely heterogeneous mechanism.