Nanoceria (cerium oxide nanoparticles) exhibits excellent catalytic activity towards chromogenic substrate 3,3,5,5-tetramethylbenzidine (TMB) in the presence of hydrogen peroxide (H₂O₂), which has been reported. However, the understanding of the interaction between H₂O₂ and nanoceria is far from comprehensive. Herein, we further studied the interaction between H₂O₂ and dextran-coated nanoceria and found that H₂O₂ plays a dual role in nanoceria's oxidase activity both as an inhibitor and a promoter, depending on its concentration. At millimolar levels, H₂O₂ can promote nanoceria's oxidase activity; however, micromolar concentrations of H₂O₂ can inhibit its catalytic activity. In addition, this inhibiting effect is linearly dependent on the concentration of H₂O₂. Based on these findings, a simple, rapid and highly sensitive colorimetric method was established for the determination of H₂O₂ with a limit of detection (LOD) of 2.5 μM (3σ/slope) and a linear range from 4−40 μM. When coupled with glucose oxidase, glucose can be detected down to 2 μM in the linear range of 4−40 μM. Furthermore, this method was successfully applied in the determination of glucose in mouse serum samples. With the new understanding of the interaction between H₂O₂ and nanoceria, applications of nanoceria-based sensors in engineering, biotechnology and environmental chemistry can be further exploited.