Nanocrystalline (4–5nm) Ce 1−x Rh x O 2−y mixed oxides (x=0.03–0.21) were synthesized using water in oil microemulsion method. Morphology, microstructure and phase composition of the samples subjected to heat treatment in oxidizing and reducing atmosphere were investigated by TEM, SEM-EDS, XRD, Raman and IR spectroscopy. Samples with x≤0.16 were structurally stable in oxidizing atmosphere up to 850°C. Above this temperature the samples decomposed into Rh deficient, nanosized Ce 1−x Rh x O 2−y and large (few μm) Rh 2 O 3 crystals. In hydrogen atmosphere segregation of small (1–2nm) Rh crystallites in special epitaxial orientation Rh (111)||CeO 2 (111) started at 500°C. The epitaxial orientation of small Rh crystallites was preserved up to 1000°C indicating their strong bonding to the ceria surface. Partial substitution of Rh for Ce strongly enhanced reducibility of ceria at low temperatures (below 200°C) and hindered the sintering of ceria at high temperatures. Ce 0.89 Rh 0.11 O 2−y shows an interesting property of reversible extraction–dissolution of Rh upon reduction–oxidation cycles at 500°C which is important for potential catalytic applications.