NO, and particulate material in diesel exhaust causes a major environmental problem. To remove these compounds simultaneously, catalytic reduction of NO with carbon particulate material to form N-2 and CO2 was investigated. The catalyst system consisting of Pd, Al2O3 support, and activated carbon (AC) reductant was found to be the most active. The catalytic activity was little affected by SO2 impurity (SO2/NO = 0.1%/0.2%) under the conditions employed. In the presence of O-2 (O-2/NO = 0.11%/0.15%), however, the N-2 yield was a little less than that without O-2. During reaction with O-2, the presence of surface NO2 species such as bridging and chelating nitrates, and free nitrate was assumed by in situ DRIFT-IR spectra. The catalytic activity was found to increase by addition of K to the catalyst system.