The formation, thermal decomposition, and reduction of small PdO particles were studied by high-resolution transmission electron microscopy and selected area electron diffraction. Welldefined Pd particles (mean size of 5-7 nm) were grown epitaxially on NaCl (001) surfaces and subsequently covered by a layer of amorphous SiO 2 (25 nm), prepared by reactive deposition of SiO in 10 -2 Pa O 2 . The resulting films were exposed to molecular O 2 in the temperature range of 373-673 K, and the growth of PdO was studied. The formation of a PdO phase starts at 623 K and is almost completed at 673 K. The high-resolution experiments suggest a topotactic growth of PdO crystallites on top of the original Pd particles. Subsequent reaction of the PdO in 10 mbar CO for 15 min and thermal decomposition in 1 bar He for 1 h were also investigated in the temperature range from 373 to 573 K. Reductive treatments in CO up to 493 K do not cause a significant change in the PdO structure. The reduction of PdO starts at 503 K and is completed at 523 K. In contrast, PdO decomposes in 1 bar He at around 573 K. The mechanism of PdO growth and decay is discussed and compared to results of previous studies on other metals, e.g., on rhodium.