TiO2-supported gold nanoparticles exhibit surprising catalytic activity for oxidation reactions compared to noble bulk gold which is inactive. The catalytic activity is localized at the perimeter of the Au nanoparticles where Au atoms are atomically adjacent to the TiO2 support. At these dual-catalytic sites an oxygen molecule is efficiently activated through chemical bonding to both Au and Ti4+ sites. A significant inhibition by a factor of 22 in the CO oxidation reaction rate is observed at 120 K when the Au is preoxidized, caused by the oxygen-induced positive charge produced on the perimeter Au atoms. Theoretical calculations indicate that induced positive charge occurs in the Au atoms which are adjacent to chemisorbed oxygen atoms, almost doubling the activation energy for CO oxidation at the dual-catalytic sites in agreement with experiments. This is an example of self-inhibition in catalysis by a reactant species.