Gold nanoparticles (NPs) stabilized by carboxylate modified polyvinylpyrrolidone have been prepared and fully characterized. The gold NPs efficiently catalyze the aerobic oxidation of benzyl alcohol in water at ambient temperature and are easily separated from the reaction mixture by lowering the pH of the solution, causing the NPs to precipitate. The mechanism of the precipitation process has been studied. Due to the efficiency of this process, the NPs may be reused as catalysts by readjusting their pH.