Our research focus here is to gain fundamental understanding on how point defects, particularly, surface oxygen vacancies on metal oxide surfaces affect adsorption properties of small molecules and metal clusters and how they modulate the reactivity of adsorbed transition metal clusters by using first-principles quantum chemistry methods. Results from such a research would have broad impacts in environmental chemistry and electrochemistry, in rational design of supported metal nano-cluster catalysts, electronic devices, chemical sensors, and biocompatible materials. Surface vacancies are known to be active centers for chemisorption of small molecules and to be nucleation centers for metal clusters. Furthermore, the degree of charge transfer from the vacancies can alter the reactivity of the adsorbed metal cluster. Thus, information gain from this proposed study would be useful for rational design of supported transition metal nano-cluser catalysts. MgO(100) and TiO2(110) are well-characterized surfaces and are being used as supports in many experiments for dispersed metal nano-cluster catalysts, and thus will be used here as models of oxide surfaces. To achieve our objectives, the first step is to have a firm understanding on the electronic structure of vacancies and its reactivity toward adsorption of small gas-phase molecules such as H2, O2, CO, and H2O. In another front, studies on the adsorption of different small transition metal clusters on vacancies of MgO(100) and TiO2(110) and the reactivity of these adsorbed clusters are also be carried out. The differences between MgO and TiO2 surfaces in the electronic structures and in the nature of the interactions with transition metal clusters allow us to provide insight into the origin of the not well-understood Strong Metal-Support Interaction (SMSI) phenomenon observed on the TiO2, but not on the MgO surface. Our interests are to validate different models that were previously proposed to explain the SMSI phenomenon, to determine the effects of the electron transfer between the oxide surface and the adsorbed metal atom on the catalytic activity of the system and how such activity depends on the degree of d-shell filling of the adsorbed metal atom, the band gap of the support, and the nature of the vacancies. State-of-the-art embedded cluster and periodic electronic structure methods are being employed for this research.