The oxidation of ethene on the Pd(111) surface was studied in the temperature range of 330-923 K by in situ XPS and mass spectrometry during both heating and cooling in a reaction mixture of 5 x 10(-4) mbar C2H4 and 1.5 x 10(-3) mbar O-2. Carbon-containing surface species were found to be strongly predominant over oxygen species within the whole temperature range, despite the excess of oxygen in the gas phase. Diffusion of carbon into the palladium bulk started at 480 K, leading to the appearance of an electronically altered, dissolved carbon phase with a C Is binding energy of 284.45 eV at similar to 500 K, which extended over several layers in the near-surface region and was stable up to similar to 650 K. This spectroscopic trend was clearly related to a pronounced shift of catalytic selectivity toward CO. Above 660 K, the dissolved carbon species decomposed, and the reaction occurred on an adsorbate-depleted Pd metal surface, with CO as the main product. During the cooling ramp, the same near-surface carbon modification formed at a 70-degree-lower threshold temperature, inducing pronounced hysteresis of the catalytic selectivity. (c) 2006 Elsevier Inc. All rights reserved.