Surface reactivity on metal oxide surfaces and its enhancement play important roles in heterogeneous catalytic reactions. In this work, the interactions of 02 and H2O with reduced CeO2 (111) surface are studied by density functional theory calculations. The corresponding adsorption geometries, adsorption energies, and reaction barriers are reported. It is found that the diffusion of subsurface oxygen vacancies toward surface can be promoted by the adsorption 02 on the CeO2 (111) surface. Then those oxygen vacancies diffused onto surface sites will be healed by the adsorbed O-2, leaving behind an O adatom on the surface. Interestingly, at moderate temperatures, the surface O adatom will swap positions with surface lattice O dynamically. The adsorption of H2O may also induce the diffusion of oxygen vacancies from subsurface to surface, leading to the formation of two hydroxyls on the CeO2 (111) surface. In addition, the interaction between the paired hydroxyl groups and O-2 will result in the formation of water and oxygen adatom on the surface. Our results have revealed important roles played by the subsurface oxygen vacancies in the enhancement of surface reactivity, especially when involving the adsorption of water and oxygen.