Ceria has conventionally been thought to have a cubic fluorite structure with stable geometric and electronic properties over a wide temperature range. Here we report a reversible tetragonal (P42/nmc) to cubic (Fm-3m) phase transition in nanosized ceria, which triggers negative thermal expansion in the temperature range of -25 °C-75 °C. Local structure investigations using neutron pair distribution function and Raman scatterings reveal that the tetragonal phase involves a continuous displacement of O2- anions along the fourfold axis, while the first-principles calculations clearly show oxygen vacancies play a pivotal role in stabilizing the tetragonal ceria. Further experiments provide evidence of a charge transfer between oxygen vacancies and 4f orbitals in ceria, which is inferred to be the mechanism behind this anomalous phase transition.