Catalysis over metal nanoparticles is essential for carbon nanotube growth. Thus it is very important to understand the carbon chemistry on nanometer size metal particles. First‐principles electronic‐structure calculations have been used to investigate carbon monoxide (CO) disproportionation on an isolated Fe55 cluster. After CO dissociation, O atoms remain on the surface while C atoms move into the cluster, presumably as the initial step towards carbide formation. The lowest CO dissociation barrier found on the cluster (0.63 eV) is lower than on most studied Fe surfaces. The dissociation occurs on a vertex between the facets. A possible path for CO2 formation was also identified with a lowest reaction barrier of 1.04 eV.