Decomposition of PdSO4, a species responsible for the deactivation of Pd-based methane combustion catalysts, was studied using a PdSO4/Al2O3 model system. PdSO4 was observed to behave differently under different reaction conditions. The decomposition of PdSO4 under inert atmosphere probably involved only one reaction step and resulted in the formation of metallic palladium. Under H-2-containing atmosphere, the decomposition of PdSO4 resulted eventually in the formation of Pd4S, which is probably one of the many possible sulfur-containing palladium species that can be formed during regeneration of a sulfur-poisoned Pd-rich methane combustion catalyst. The formation of Pd4S can provide a reasonable explanation to the threshold temperature of sulfur removal from the catalyst, as well as to the residual sulfur present in the catalyst after regeneration under reductive atmosphere. Overall, the results obtained in the study provide deeper insight into the regeneration process of Pd-based catalysts, possibly enabling development of a more efficient regeneration strategy.