In the high-temperature environments needed to perform catalytic processes, supported precious metal catalysts lose their activity severely over time. Generally, loss of catalytic activity is attributed to nanoparticle sintering or processes by which larger particles grow at the expense of smaller ones. Here, by independently controlling particle size and particle loading using colloidal nanocrystals, we reveal the opposite process as an alternative deactivation mechanism: nanoparticles rapidly lose activity for methane oxidation by high-temperature decomposition into inactive single atoms. This deactivation route is remarkably fast, leading to severe loss of activity in as little as 10 min. Importantly, this deactivation pathway is strongly dependent on particle density and the concentration of support defect sites. A quantitative statistical model explains how, for certain reactions, higher particle densities can lead to more stable catalysts.