The selective reduction of NO by methane has been studied on a series of Pd catalysts. When supported on non-acidic materials, palladium is totally unselective for the conversion of NO and very active for the combustion of methane. By contrast, lowloading Pd catalysts supported on acidic (protonic) materials (H-ZSM-5, H-Mordenite, sulfated zirconia) exhibit much higher selectivity. X-ray absorption studies (XANES and EXAFS) were conducted on several Pd catalysts before and after the reduction of NO in the presence of oxygen. These studies have demonstrated that, upon exposure to the reaction mixture (CH4 + NO + O-2), Pd gets oxidized. The morphology of the oxidized Pd species strongly depends on the metal loading and the acidity of the support. On low Pd loading catalysts over acidic supports, the metallic Pd particles, initially present, are rapidly transformed in Pd2+ ions by the reaction mixture. By contrast, on the non-acidic materials, the Pd particles are transformed into PdO clusters. These clusters have high catalytic activity for the methane combustion, resulting in low SCR selectivities.