The minimum operating temperature for sustainable oxydehydrogenation of butene to butadiene over Fe2O3 can be reduced from ca. 300 degrees to less than or equal to 150 degreesC by including Pd in the catalyst formulation. This effect would not be predicted on the basis of the widely accepted redox mechanism for selective oxidation, in which transport of the essential oxide ions can become limiting at low temperatures. Temperature-programmed desorption and temporal analysis reveal that the selective oxygen within the Pd-Fe-O catalyst is localised near the surface, and can be replenished easily from the gas phase. The ability of Pd to activate oxygen at low temperatures is critical to the process of oxygen replenishment, but just as important, it promotes the removal of site-blocking species from the surface of the catalyst. We show that whereas unmodified alpha -Fe2O3 is in fact capable of converting 1-butene to 1,3-butadiene at temperatures as low as 150 degreesC, the activity is extremely short-lived because of the buildup of site-blocking carbonaceous species at this temperature. The addition of Pd enables the removal of these undesirable species at low temperatures.