Density functional theory (DFT) studies have revealed the energetically favorable reaction paths for oxidation of CO on Pd-4 cluster. Adsorption of various species such as O-2, 2O, O, CO, CO2, and coadsorbate combinations, including O-2+CO, 2O+CO, O+CO, and O+CO, on neutral, cationic, and anionic Pd4 clusters were investigated. The results indicate that Pd-4(+) and Pd-4 are more effective for catalyzing CO in comparison with Pd-4(-). It is further observed that dissociated oxygen is a superior oxidant for CO oxidation on Pd-4(q) (q = 0, 1, -1) than molecular and atomic oxygen.