A simple enzyme-free spectrophotometric detection of hydrogen peroxide is demonstrated based on its colorimetric reaction with oxygen deficient cerium oxide nanoparticles (CNPs). This colorimetric sensitivity of CNPs towards H2O2 increases significantly with decreasing crystallite size due to an increase in the surface area as well as the concentration of Ce3+ on the surface. The origin of this colorimetric reaction was studied using DFT that suggests the adsorption of peroxide and oxygen molecules on ceria nanoparticles creates new states in the electronic structure leading to transitions absorbing in the visible region of the electromagnetic spectrum. For detection, a single layer of nanoparticles was immobilized on transparent microscopic glass slides using self-assembled monolayers (SAMs) of poly(4-vinylpyridine) (PVP). Cluster-free and uniform immobilization of nanoparticles was confirmed from atomic force microscopy (AFM) and helium ion microscopy (HIM). UV-Visible absorption measurements showed a concentration dependent increase in absorbance from immobilized CNPs that were exposed to increasing concentrations (10–400 μM) of hydrogen peroxide. The immobilized CNPs can be baked at 80 °C after initial use to regenerate the sensor for reuse. The development of a direct, reusable, enzyme-free and dye-free peroxide sensing technology is possible and can be immediately applied in various areas, including biomedicine and national security.