We carried out density functional theory calculations to investigate the ripening of Pd clusters on CeO2(111). Starting from stable Pdn clusters (n=1-21), we compared how these clusters can grow through Ostwald ripening and coalescence. As Pd atoms have a high mobility than Pd¬n clusters on the CeO2(111) surface, Ostwald-ripening is predicted to be the dominant sintering mechanism. Particle coalescence is only possible when very small clusters with less than 5 Pd at-oms are involved. These ripening mechanisms are facilitated by adsorbed CO through lowering barriers for the cluster diffusion, detachment of a Pd atom from clusters, and transformation of initial planar clusters.