Exposure of Ag/Ag(100) thin films to molecular oxygen (O2) at 220–250 K is shown to activate low-temperature coarsening of submonolayer island distributions, and a smoothing of multilayer films with “mounded” morphologies. Dissociation of O2 at kink sites populates step edges with atomic oxygen (O), modifying the step-edge energetics, and facilitating Ostwald ripening of film nanostructures. We propose that ripening occurs by “easy” detachment and terrace diffusion of an AgnO species. Cluster diffusion does not play a significant role, contrasting with the O-free system.