Low-temperature CO oxidation was carried out over hydrous and anhydrous PdO powders to examine the effects of surface water species. Hydrous PdO exhibits 100% CO conversion even at room temperature, whereas hydrous PdO pretreated in He at 400 degrees C and anhydrous PdO do not exhibit significant CO oxidation activity even at 100 degrees C. Approximately one-half of the CO is oxidized catalytically over hydrous PdO by gas-phase oxygen, whereas oxygen contained in the solid oxidizes the rest of the CO by a gas-solid reaction. X-ray photoelectron spectroscopy (XPS) data indicate that the water is present in hydrous PdO as hydroxyl groups and not molecular water. Without the presence of these hydroxyl groups, CO oxidation does not occur. During CO oxidation, metallic Pd forms and hydroxyl groups may react to form water, resulting in significant activity decay. The metallic Pd is inactive for catalytic CO oxidation at the temperatures used in this study. As the reaction temperature is increased from 30 to 100 degrees C, subsurface hydroxyl groups migrate to the surface, partially restoring the catalytic activity. (c) 2006 Elsevier Inc. All rights reserved.