Palladium is one of the most active catalysts for the catalytic combustion of methane. Since Pd is oxidized during methane combustion to PdO and PdO is required for high activity, it is of interest to understand the dynamics of Pd oxidation and the structure of the oxide formed as well as the dynamics of PdO reduction by H-2 and CH4. In the present study isothermal and temperature-programmed oxidation and reduction were used to probe the dynamics of the oxidation and reduction of zirconia-supported Pd. During uptake in oxygen, a monolayer of oxide is generated immediately, and upon further oxidation, the oxide forms a shell around a core of metal with thicknesses that increase with the oxidation temperature. The initial oxide is amorphous and subsequently transforms to crystalline PdO. The dynamics of Pd oxidation suggest that oxidation follows the Cabrera-Mott theory. Reduction of PdO by H-2 occurs in a shellwise manner, consistent with a shrinking core mechanism, while reduction in CH4 occurs via an autocatalytic, nucleation mechanism. In the latter case, small particles of Pd must first be formed on which CH4 can dissociate. The fragments (H and CHx (x = 3-1)) diffuse to the metal-oxide boundary where reduction of the oxide occurs. Consistent with this picture, the kinetics of PdO reduction are first order in Pd initially, but then they become zero Order in Pd.