The activity of Pd/Al2O3 and Pd/Al2O3-CeO2 samples has been tested in the selective catalytic reduction of NO by propene. It is found that the activity of Pd/Al2O3 decreases with calcination temperature, while the activity of Pd/Al2O3-CeO2 increases abnormally with increasing calcination temperature. Surface-area measurement shows both samples suffer a linear decrease in their surface area, so it is reasonable to attribute the activity enhancement to the effect of CeO2. The adsorption behavior and state of surface-active sites have been characterized by diffuse reflectance FTIR spectroscopy using CO and NO as probes and the effect of CeO2 has been revealed. The CeO2 component increases and stabilizes the dispersion of surface Pd species to prevent it from aggregating at high temperature. CeO2 may also act as a buffer during the redox cycle of Pd, lengthen the period of Pd redox procedure and render Pd a property of "inertia" in its redox process, thus increasing the activity of the Pd/Al2O3-CeO2 sample. The essential feature of both effects is the strong interaction between Pd and CeO2. The intensity of interaction increases linearly with calcination temperature and so does the sample activity.