Au-Ag/CeO2 catalysts with various Au/Ag atomic ratios were prepared by deposition-precipitation method. These catalysts were tested for preferential oxidation of carbon monoxide (PROX). These catalysts have been characterized by XRD, TEM, TPR, and XPS techniques to gain the structural information on the supported metal catalysts. Fine gold nanoparticles around 2-4 nm were formed and dispersed well on the support. Au-Ag/CeO2 with Au/Ag atomic ratio of 5:5 showed higher catalytic activity than monometallic and other bimetallic Au-Ag/CeO2 catalysts with Au/Ag ratios of 9:1 and 7:3. The CO selectivity increased with increasing silver amount. In Au-Ag/CeO2 catalysts, the higher calcination temperature resulted in gold sintering, which resulted in lower activity. Characterization by XPS and TPR revealed that the presence of different gold and silver species plays an important role in the activity of the catalyst. The formation of bimetallic alloy in Au-Ag/CeO2 catalyst with Au/Ag ratio of 5:5 which showed a lower reduction temperature, is the reason for its excellent performance toward PROX reaction. The bimetallic catalyst also exhibited higher stability than the monometallic catalysts. The electronic structures of both gold and silver can be crucial to CO bonding. CO adsorbs strongly on Au. Ag+ was the active species for CO oxidation. The presence of both Au0 and Ag + synergistically facilitate CO oxidation by the reaction between CO and O2 to form CO2. The formation of the bimetallic nanoalloy enhanced the CO oxidation.