X-ray photoelectron spectroscopy and ion-scattering spectroscopy (ISS) were used to investigate the interaction of palladium with reduced thin-film alumina. The substrate was prepared by Ar+ ion bombardment thinning of the natural oxide layer on polycrystalline aluminum foil. It was found that the constitution of a surface equilibrium is determined by the energy of sputtering ions. Therefore, after the sputtering, the aluminum oxide surface is covered by more or less Al-o-rich overlayer. During the first stage of the Pd deposition, the I-Al/I-O ratio decreases because of Pd atom deposition onto the Al sites, keeping the anionic oxygen sites unaffected. With increasing Pd, the PdAl intermetallic compound is formed. The alloy forms three-dimensional clusters and a bare alumina surface appears, giving the ISS intensity ratio I-Al/I-O characteristic for gamma -Al2O3. At a high amount of deposited Pd, the Pd bulk-like phase is formed, gradually burying the PdAl alloy clusters. To interpret catalytic behavior of Pd/Al2O3 systems, the presence of the PdAl alloy caused by strong metal-substrate interaction should be considered.