Co^II(SBSH)/Y has been prepared by solid-solid interaction of Co^II-Y with salicylidinebenzenesulphonylhydrazone ligand using the flexible ligand method and its activity toward CO oxidation was examined and compared with Co^II-Y. The composition and structure of this new catalyst have been identified. The prepared zeolites have been characterized by elemental analysis, FTIR, UV-Vis., magnetic measurements, XRD and thermal (TG, DTA) as well as surface area measurements and nitrogen adsorption studies. The results showed that the Co(II) ions in zeolite-Y are coordinated with the ligand through the (C=N), (NH), (SO₂) and (OH) groups with replacing of one proton from the latter group forming 3:1 metal - ligand encapsulated complex differs completely from that prepared in solution. The resulting catalyst was found to be thermally stable up to 1000 ^°C. Adsorption of CO at room temperature on Co^II-Y and Co^II(SBSH)/Y showed peaks characteristic to CO₂ (as an oxidation product) and different Co-carbonyl species which indicated the presence of different oxidation states of cobalt. The FTIR spectra indicated the presence of carboxyl group and different carboxylate species after CO adsorption at room temperature (RT). It is concluded that, the oxidation of CO on Coⁿ⁺ (n ≤ 2) sites is already starting at room temperature and hence it may be considered as an efficient alternative for noble metal catalysts used in the CO oxidation reaction.