The mechanism of the gold nanocluster-catalyzed aerobic homocoupling of arylboronic acids has been elucidated by means of DFT calculations with Au20(-) as a model cluster for the Au:[poly(N-vinylpyrrolidin-2-one)] catalyst. We found that oxygen affects the adsorption of phenylboronic acid and, by lowering the energy barrier, a water molecule enhances dissociation of the C-B bond, which is probably the rate-determining step. The key role of oxygen is in activating the surface of the gold cluster by generating Lewis acidic sites for adsorption and activation of the phenylboronic acid, leading to the formation of biphenyl through a superoxo-like species. Moreover, the oxygen adsorbed on the Au nanocluster can act as an oxidant for phenylboronic acid, giving phenol as a byproduct. As shown by NBO analysis, the basic aqueous reaction medium facilitates the reductive elimination process by weakening the Au-C bond, thereby enhancing the formation of biphenyl. The coupling of phenyl and reductive elimination of biphenyl occur at the top or facet site with low-energy-barrier through spillover of phenyl group on Au NC. The present findings are useful for the interpretation or design of other coupling reactions with Au NC.