The effect of addition of In and Pb on the reduction of N2O by CO was studied over SiO2 supported Pd catalysts, using a closed gas circulation system as well as in-situ infrared spectroscopy. Formation of intermetallic compounds such as Pd0.48In0.52, Pd3Pb and Pd3Pb2 was observed which caused a drastic enhancement of the rate of N-2 formation. The infrared spectroscopic analyses revealed a weakening of the adsorption strength of CO on Pd metal by the formation of intermetallic compounds, which is likely the main reason for the enhancement of the reaction rate. From a kinetic investigation as well as in situ FT-IR observation during the N2O-CO reaction, a redox mechanism was proposed involving the oxidation of the surface by N2O followed by its reduction by CO. Over Pd/SiO2, the former process seems to be the rate limiting step because of the inhibition of N2O activation by strongly adsorbed CO. By adding In or Pb, the rate limiting step shifted to the latter process, which resulted in a large enhancement in the rate of N-2 formation.