Polarization-dependent extended x-ray-absorption fine-structure measurements above the Co-K absorption edge were carried out to experimentally prove the theoretically predicted contraction of interatomic distances in nanoscale Co islands (∅ ≈ 1 nm) on Cu(001).Within the Co islands of thickness one monolayer (ML) which were deposited at 160 K substrate temperature, we find an in-plane Co-Co distance of 2.45 ± 0.02 Å, significantly shorter than in bulk Co (2.51 Å) and in close agreement with theoretical predictions. The effective in-plane coordination number N^*_Co (||)is equal to 3.2 ± 0.5 and 5.0 ± 0.7 (N^* = 6 for an infinite island) for samples covered by 0.3 and 0.7 MLs of Co, respectively. The low value for the 0.3 ML sample is related to the finite island size and to about 20% of the intermixing between the adsorbate and substrate atoms. The experimental results are supported by molecular dynamics calculations.