Catalytic combustion of methane has been studied for many years due to its applications in power generation and emissions clean-up. Among different catalysts, Pd-based materials are the most active for the catalytic combustion of methane. In this work we have investigated the Pd–PdO transformation process on Pd–alumina and Pd–ceria–alumina combustion catalysts by combining different analytical techniques. Both decomposition of PdO and reoxidation of Pd take place via the formation of an intermediate, which has been identified as a surface or interfacial PdOx on the basis of X-ray Photoelectron Spectroscopy analysis. The results obtained by coupling temperature programmed oxidation with high resolution transmission electron microscopy and X-ray photoelectron spectroscopy indicate that PdO decomposition is a thermodynamically driven process, in which the support affects only the amount of PdO species involved in each decomposition step. On the contrary, Pd reoxidation is a kinetically limited process, which is strongly affected by the environment. In particular, the presence of promoters such as CeO2 or residual PdO significantly speeds up Pd oxidation, thus reducing the characteristic Pd–PdO hysteresis.