The role of Pd subsequently exchanged in Co-ferrierites for the reduction of NO by CH4 in the presence of water has been examined in a fixed bed flow reactor system and characterized by using TPR, TPD and XPS. Although the Co-FER catalysts prepared in the present study revealed high performance of NO removal activity under dry conditions, apparent catalyst deactivation has been observed, particularly at reaction temperatures below 450degreesC, when 10% water was included in the feed gas stream. The water tolerance of the catalyst, however, was significantly improved by the addition of Pd to the Co-FER catalyst. The major role of Pd on PdCo-FER is the oxidation of NO to NO2, which is commonly regarded as a reactive intermediate for CH4-SCR reaction system as confirmed by NO TPD. It also enhances the adsorption of NO on the catalyst surface. In addition, Pd alone is also able to remove NO by CH4, particularly at high reaction temperature over 450 degreesC, regardless of the presence of water in the feed gas stream. The state of cobalt is mainly in the form of Co2+ independent of I'd inclusion on the surface of Co-FER catalyst. No major alteration of Co state on the catalyst surface upon the addition of Pd to Co-FER has been observed as confirmed by TPR and XPS studies of cobalt, probably due to the low content of Pd in the present catalytic system.