The reduction of NO by CO over Pd/gamma-Al2O3 and Pd-VOx/gamma-Al2O3 catalysts has been studied by combining activity and selectivity measurements with FTIR spectroscopy of gas phase products and adsorbed species under reaction conditions at 300 degrees C. Characterization of fresh, reduced samples, by H-2 chemisorption, TEM and FTIR spectroscopy of adsorbed of CO and NO, indicated that the promoter is not covering the metal surface. Under dry conditions the rate of N-2 formation is lowered on the vanadia-modified alumina but the production of N2O was not altered. As a result the selectivity to N-2 decreased markedly on Pd-VOx/gamma-Al2O3. FTIR and XPS characterization of used catalysts demonstrated that the negative effect of VOx on N-2 formation is due to an oxidized state of Pd that develops under reaction conditions. FTIR analysis of the gas phase products showed that both catalysts produce small amounts of gas phase HNCO and NH3 with the participation of surface -OH groups. FTIR spectra of the catalysts surface under reaction conditions demonstrate the presence of isocyanate (-NCO) and hydrogen containing compounds derived from HNCO. These stable species are not responsible for the production of N2O, but contribute to deactivation of the catalyst. They are rapidly eliminated upon water injection with a brief high production of NH3. Under steady state conditions water increases the CO conversion and the selectivity to N-2 and NH3 on Pd/gamma-Al2O3. The most notable effect is a marked reduction in N2O production. On Pd-VOx/gamma-Al2O3 water increases the conversion of both NO and CO, as well as the NH3 formation. The selectivity to N-2 is not altered and it is lower than the ones of NH3 and N2O. On both catalysts the NH3 formation increases due to the rapid hydrolysis of -NCO and HNCO. The H-2 participation in the process of NH3 formation is excluded due to the very low activity of Pd/gamma-Al2O3 and Pd-VOx/gamma-Al2O3 for the water-gas shift reaction. (C) 2009 Elsevier B.V. All rights reserved.