The effect of partial substitution of Co by Pd in LaCoO3 perovskite structure (i.e., LaCo0.95Pd0.05O3) and the reductive diffusion of Pd from the bulk of perovskite to its surface, thus forming Pd nanoparticles, on CO and C3H8 oxidation present in air (simulated exhaust gas) are reported. X-ray powder diffraction (XRD) analyses confirm the perovskite structure for the catalysts. Scanning electron microscopy (SEM) and BET surface area measurements show that partial substitution of Co by Pd decreases the crystallite size of the perovskite and therefore increases its surface area. H-2-temperature programmed reduction (TPR) experiments reveal that Pd reduces at 135 degrees C and facilitates the reduction of Co in the perovskite structure. By partial reduction of the Pd containing catalyst at 180 degrees C for 30 min, the complete oxidation temperatures of CO and C3H8 decrease by about 70 and 50 degrees C, respectively. The reduction duration of the Pd containing catalyst strongly affects the T-50 and T-90 temperatures (temperatures at which 50 and 90% conversion occurs, respectively) and has an optimum, where it decreases by increasing the reduction temperature of the catalyst. (c) 2008 Elsevier B.V. All rights reserved.