In situ X-ray absorption spectroscopy combined with on-line catalytic measurements using FT-IR spectroscopy unequivocally identified that metallic palladium is the more active phase in the aerobic oxidation of benzyl alcohol than palladium oxide. The aerobic oxidation of benzyl alcohol in cyclohexane at 50 degrees C was low over oxidized 0.5%Pd/Al2O3 and 5%Pd/Al2O3 catalysts. XANES and EXAFS showed that the catalysts in the as-received state were almost fully oxidized and no reduction of the palladium constituent was observed during time-on-stream. After in situ reduction by hydrogen-saturated cyclohexane, the catalysts were much more active (over 50 times) than before reduction. Both XANES and EXAFS uncovered that the palladium constituent was mainly in a reduced state under these conditions of high catalytic activity. This demonstrates that metallic palladium is the active phase for alcohol dehydrogenation.