Hydrogen permeance and surface states of Pd-Ag/ceramic composite membranes during preparation process were investigated. After thermal treatment in air, the composite membranes exhibited high hydrogen permeability and permselectivity. The sealing process did not change the states of Pd, Ag and O, although an X-ray photoelectron spectroscopic (XPS) signal of sulfide was found. At the same time, the sealing process led to an increase in concentration of carbon and sulfur contaminants in the surface layer, resulting in a decrease of hydrogen permeability. Moreover, carbon was present as graphite and covered membrane surfaces after running the sealing process six times. On the other hand, the thermal treatment in air led to oxidization of Pd and formation of the PdO state, and XPS data showed a significant enrichment of the Pd element at the surface of membranes. Carbon contamination concentration at the top surface of membranes decreased during thermal treatment, and carbon dioxide was found on the surface of activated membranes; at the same time, the surface state of sulfur changed to a new state of sulfate, which eventually resulted in recovery of hydrogen permeability. (c) 2006 American Institute of Chemical Engineers AIChE J, 52: 2783-2791, 2006.