Mg-modified alumina supports were prepared in both impregnation and co-precipitation routes, and Pd catalyst was finally obtained by incipient wetness method. Catalysts supported on different oxides were characterized by means of conventional techniques like XRD, laser Raman, CO-pulse, N-2-adsorption, etc. It was demonstrated that dispersion of Pd component on unit BET surface area increased and PdO active phase crystallized well on account of the formation of MgAl2O4 spinel. Combined with temperature programmed reaction techniques (O-2-TPD, CH4-TPR, H-2-TPSR), three kinds of PdO species were identified on spinel support. Moreover, a moderate interaction between MgAl2O4 spinel oxide support and PdO was discovered and an epitaxy formation mechanism of the crystalline PdO species was suggested. For this novel PdO species satisfied the requirement of structural particularity for reaction with methane, it could serve as the active phase for methane combustion. As a result, prominent improvement on ignition performance was observed in following catalytic activity test.