Supported metal nanoclusters are often highly active in many catalytic reactions but less stable particularly under harsh reaction conditions. Here, we demonstrate that this activity-stability trade-off can be efficiently broken through rational design of surrounding microenvironment of the supported nanocatalyst including gas adsorbate overlayer and underneath support surface chemistry. Our studies reveal that chemisorbed oxygen species on Ag surface and surface hydroxyl groups on oxide support, which are dynamically consumed during reaction but sustained by reaction environment (O2 and H2O vapor), drive spontaneous redispersion of Ag particles and stabilization of highly active Ag nanoclusters. Such a dynamic confinement effect from gas-catalyst-support interaction enables the Ag nanoclusters to exhibit complete catalytic oxidation of CO over a wide temperature window of 25 - 500 °C under dry conditions and 200 - 800 °C under wet conditions as well as remarkable stability at 300 °C over 1000 h.