The catalytic combustion of CH4 has been investigated over Pd/ZrO2 with the aim of identifying how the state of oxidation of the Pd affects the catalytic activity, particularly at low temperatures. It is found that fully reduced Pd is inactive and that the activity increases at 533 K until a plateau in activity is achieved when 6-7 ML of PdO have formed over the surface of the Pd crystallites. The maximum activity is identical to that for fully oxidized Pd. Examination of the PdO formed under reaction conditions and during oxidation in O-2 at 533 K reveals some differences. Temperature-programmed reduction in CH4 and Raman spectroscopy demonstrate that the oxide formed under reaction conditions is largely crystalline PdO, whereas the oxide formed in O-2 is a mixture of amorphous and crystalline PdO. The crystalline form of PdO is found to reduce more readily than the amorphous form. It is observed that the low-temperature CH4 combustion activity of PdO can be enhanced by producing a small amount of metallic Pd on the surface of PdO. The metallic Pd is more effective than PdO for the dissociative adsorption of CH4. It is hypothesized that the products of CH4 adsorption on Pd, H-s and CHx,s (x = 3-1.), rapidly diffuse to the Pd/PdO interface and then reduce the PdO to Pd. The effects of metallic Pd cannot be sustained, though, under steady-state conditions, because the metallic Pd is oxidized back to PdO.