Highly dispersed palladium catalysts supported on gamma-alumina and silica were prepared and studied by EXAFS spectroscopy, IR spectroscopy, X-ray diffraction, and CO uptake. The Pd-Pd EXAFS oscillations for the freshly reduced catalysts are only about 1/4th as strong as those observed for bulk Pd, indicating that the Pd particles in the catalysts are either very small, highly disordered, or both. Exposure to CO at room temperature causes the Pd-Pd EXAFS intensity to increase dramatically, in some cases to nearly the bulk Pd value. This increase is irreversible with respect to CO removal. IR spectra show CO binding only in the expected 2-fold bridging and linear sites. The increase was observed on both SiO2 and Al2O3 supports but varied in magnitude with support and support condition. Exposure to water vapor did not affect the Pd-Pd EXAFS. Several possible explanations for the EXAFS intensity increases are discussed. The most likely appears to be that CO increases the mobility of Pd atoms over the support, and allows growth of the Pd clusters present after reduction. These results have implications for the interpretation of the commonly used CO adsorption method for measuring catalyst dispersion.