a b s t r a c tA series of differently loaded palladium-iron catalysts was prepared by a controlled co-precipitation method of the nitrate precursors, in order to ensure homogeneous Pd particle size-distribution. After characterization of the pre-catalysts by various techniques, different controlled reduction conditions were applied to investigate the interactions within the Pd-iron system, containing reversible and irreversible processes like phase transformations, SMSI, sintering and alloying. Strong indications for the reversible surface decoration of the Pd nanoparticles with iron oxide species via strong metal-support interaction were found by the combined results of DRIFTS, CO-chemisorption, TEM and XPS measurements. This SMSI state was found to be unstable. It was observed independent of bulk phase or palladium particle size. Catalytic CO-oxidation was found to be a suitable test reaction for the study of the phenomenon: higher activity as well as oxidative deactivation of the SMSI state was observed by investigating the lightoff behavior in repeated, temperature-programmed cycles as well as by isothermal measurements. The instability was found to be higher in case of higher Pd dispersion. In addition, bulk properties of the Pd-Fe system, like alloying, were investigated by detailed XRD measurements.