The adsorption and reaction of carbon monoxide with a polycrystalline Pd foil, containing variable amounts of defect sites, has been studied by means of temperature-programmed desorption and reaction (TPD, TPR), temperature-programmed static secondary ion mass spectrometry (TPSSIMS) and X-ray photoelectron spectroscopy (XPS). On a well-annealed Pd surface a molecular adsorption state is found, with no evidence for dissociation. In contrast, the same but Ar+ ion sputtered Pd sample is seen to dissociate part of the adsorbed CO. It is concluded that a high amount of defect sites is responsible for this phenomenon. The intensity ratios, Pd2O+/Pd2+ and Pd2C+/Pd2+, measured by TPSSIMS, have been used to monitor the build-up of surface carbon and oxygen under in situ reaction conditions. The onset temperature for CO(ad) dissociation is found to be approximately 410 K at which temperature nearly half of the molecular adsorption state has already undergone thermal desorption. C1s XPS provides corroborating evidence for carbon deposition on the surface. Recombination with oxygen followed by thermal desorption of CO is associated with the occurrence of high temperature desorption features at approximately 640 and approximately 725 K in the TPD spectra and with the disappearance of the carbidic and oxidic relative intensities in TPSSIMS. Evidence has been obtained for reversible subsurface diffusion of oxygen and carbon.