Low-temperature carbon monoxide (CO) oxidation on silver/silica aerogel (Ag/SiO2 AG) catalyst prepared by one-pot sol–gel synthesis followed by supercritical ethanol drying method is reported. Highly stable and sinter-proof catalyst led to easy reactant diffusion to the active sites. The Ag/SiO2 AG catalyst showed enhanced catalytic activity toward low-temperature CO oxidation by preventing agglomeration of silver nanoparticles inside pores and facilitating well-dispersed active sites to enhance the mass heat transfer in the mesopores. Catalyst pre-treatment conditions were found to play a crucial role in achieving high CO conversion efficiency at low light-off temperatures. Inverse counter-clockwise CO oxidation hysteresis was found to occur after the first run. The active sites contributing to this enhanced catalytic behavior were confirmed to be Ag0 from XPS, XRD, and TEM analysis. The catalyst exhibited good thermal stability up to 450 °C over repeated number of cycles.