Under oxygen-rich conditions in H-2 + NO + O-2 mixtures, Pd/V2O5/Al2O3 catalysts are active and highly selective (similar to80%) for NOx reduction to N-2. In situ DRIFT spectroscopy and reactor data show that the system operates via formation of NHx species on the highly dispersed V2O5 component. Both NH3 and NH4+ are formed, with the latter dominant. The role of the palladium component is also discussed.