Stabilizing high dispersions of catalytically active metals is integral to improving the lifetime, activity, and material utilization of catalysts that are periodically exposed to high temperatures during operation or maintenance. We have found that annealing palladium-based core@shell catalysts in air at elevated temperature (800°C) promotes the redispersion of active metal into highly dispersed sites, which we refer to as halo sites. Here, we examine the restructuring of Pd@SiO2 and Pd@CeO2 core@shell catalysts over successive 800°C aging cycles to understand the formation, activity, nanoscale structure and stability of these palladium halo sites. While encapsulation generally improves metal utilization by providing a physical barrier that promotes redispersion over agglomeration, our cycled aging experiments demonstrate that halo sites are not stable in all catalysts. Halo sites continue to migrate in Pd@SiO2 due to poor metal-support bonding, which leads to palladium agglomeration. In contrast, halo sites formed in Pd@CeO2 remain stable. The dispersed palladium also synergistically stabilizes the ceria from agglomerating. We attribute this stability, in addition to an observed improvement in catalytic activity, to the coordination between palladium and reducible ceria that arises during the formation of halo sites. We probe the importance of ceria oxidation state on the stability of halo sites by aging Pd@CeO2 after it has been reduced. While some halo sites agglomerate, we find that returning to air aging mitigates the loss of these sites and catalytic activity. Our findings illustrate how nanoscale catalyst structures can be designed to promote the formation of highly stable and dispersed metal sites.