We studied the interaction of oxygen with MgO(100) supported Pd nanoparticles at 10(-5) mbar oxygen pressure and a sample temperature of 570 K. We employed high-resolution X-ray reciprocal space mapping, which allows us to resolve the average particle shape from the quantitative analysis of intensity diffraction rods running perpendicular to corresponding facet surfaces. We identified the oxygen induced formation of nanosized (112) facets which is reversible in a CO atmosphere. Our results give direct evidence for the microscopic evolution of the nanoparticle shape under reactant exposure, which is essential for an atomistic understanding of catalytic reactions on nanoparticles.