The selective catalytic reduction of nitrogen oxides (NOx) by carbon monoxide (CO-SCR) is a promising way to deal with exhaust gasses. And Effective redox cycle and NO dissociation ability are crucial factors for catalytic reduction of NOx. Herein, Fe decorated CeO2 microsphere catalysts with surface oxygen defect were synthesized by solvothermal and calcination method. Among all catalysts, 0.5Fe-CeO2 sample showed excellent catalytic performance with efficiency near 96% for NO reduction under the condition of 550 ppmv NO, 1200 ppmv CO, and 40,000 h − 1 of GHSV. It was found that Fe doping could efficiently regulate Ce4+/Ce3+ redox couple and oxygen vacancy for catalytic activity. XRD, Raman, XPS, EPR and H2-TPR etc. were employed to explore the physicochemical properties of samples. The results showed that Fe had been incorporated into CeO2 by XRD, and the results of Raman spectrum and XPS indicated that Ce4+/Ce3+ redox couple existed in 0.5Fe-CeO2 catalyst. Furthermore, the H2-TPR spectrum displayed the formation of oxygen vacancy in the samples. N2 adsorption-desorption isotherms indicated that the doping of Fe could enlarge the specific surface area, pore volume and pore dimeter of the samples, and thus greatly enhanced the NO adsorption and further NO catalytic reduction on catalysts. In addition, other characterization of physicochemical properties and density functional theory (DFT) calculation were performed to reveal the mechanism of NO + CO reaction. As a result, a mechanism was proposed to elucidate highly efficient NO reduction over the catalysts of Fe decorated CeO2 microspheres. Finally, the synergistic effects of redox center and oxygen vacancy on catalytic activity enhancement were revealed. This work provides a promising way to the design of efficient catalysts for NO reduction.