The absolute band edge positions and work function (Φ) are the key electronic properties of metal oxides that determine their performance in electronic devices and photocatalysis. However, experimental measurements of these properties often show notable variations, and the mechanisms underlying these discrepancies remain inadequately understood. In this work, we focus on ceria (CeO2), a material renowned for its outstanding oxygen storage capacity, and combine theoretical and experimental techniques to demonstrate environmental modifications of its ionization potential (IP) and Φ. Under O-deficient conditions, reduced ceria exhibits a decreased IP and Φ with significant sensitivity to defect distributions. In contrast, the IP and Φ are elevated in O-rich conditions due to the formation of surface peroxide species. Surface adsorbates and impurities can further augment these variabilities under realistic conditions. We rationalize the shifts in energy levels by separating the individual contributions from bulk and surface factors, using hybrid quantum mechanical/molecular mechanical (QM/MM) embedded-cluster and periodic density functional theory (DFT) calculations supported by interatomic-potential-based electrostatic analyses. Our results highlight the critical role of on-site electrostatic potentials in determining the absolute energy levels in metal oxides, implying a dynamic evolution of band edges under catalytic conditions.