The effect of grain boundaries on the defect chemistry of polycrystalline cerium oxide was investigated by measuring the thermopower of cerium oxide samples with grain sizes in the range of 0.13-11.5 mum. The samples were prepared by sintering pellets from a single batch of nanocrystalline 500 ppm Gd-doped cerium oxide powder at different temperatures. A change in the sign of the Seebeck coefficient as function of the grain size was observed, indicating a transition from predominantly ionic conductivity at large grain size to electronic conductivity at small grain size. The experimental results were analyzed using the space charge model for ionic solids, which has already been successfully employed in the analysis of the grain-size-dependent electrical conductivity of cerium oxide. The agreement between the experimental data and the space charge model, regarding both electrical conductivity and thermopower, suggested that the essential effect of the grain boundaries in cerium oxide is the accumulation/depletion of charge carriers in space charge layers, whereas the effect of microstructure on charge carrier mobilities is negligible. From the analysis of experimental results, a value of Deltaphi=0.7 V was obtained for the space charge potential at the grain boundaries in cerium oxide.