Nanocrystalline PdO-CeO2 oxides were prepared by solid state grinding method, and then thermal treated at elevated temperatures. XRD, BET, Raman, XPS and TEM were employed to investigate the relationship between physicochemical characteristics and catalytic performances for the oxides. Homogeneous solid solutions are structurally stable up to 700 A degrees C whilst segregation of Pd particles occurs at higher temperature. Monolith catalysts were obtained by wash-coating oxides onto cordierites, attempting to eliminate the scarce oxygen mixed in methane through methane oxidation reactions. Oxides calcined at 800 A degrees C exhibited a higher activity during the first light-off experiment. However, activities improved dramatically for the other catalysts after the first ignition. It is apparent that small Pd particles at ceria surface were responsible for the activation of reactants at lower temperature, whereas well-dispersed Pd in ceria or solid solutions attributed to the total conversion of oxygen. Mars-van Krevelen mechanism was proposed with oxygen activation as the rate-limiting step on the PdCe-500 catalysts. PdO-CeO2 catalysts, prepared by solid-state method and wash-coated onto cordierites, exhibited a high activity for oxygen elimination under excess methane. Metallic Pd on the surface was regarded as the active sites for ignition while Pd2+ in the lattice was responsible for total oxygen conversion.