The present study aims at developing a new photocatalyst for NO reduction and CO oxidation by creating redox adsorption sites and utilizing oxide ion vacancy in titania. For this purpose, Pd ion-substituted TiO2, Ti1-xPdxO2-δ, was synthesized for the first time by solution combustion method. The photocatalytic activity was investigated with increasing Pd substitution and the optimum concentration was found to be 1 atom % Pd ion in TiO2. The reduction of NO was carried out both in the presence and in the absence of CO. Despite competitive adsorption of NO and CO on the Pd2+ sites, the reduction of NO was 2 orders of magnitude higher than unsubstituted TiO2. High rates of photooxidation of CO with O2 over Ti1-xPd xO2-δ are observed at room temperature. It was shown that enhanced CO oxidation at Pd2+ ion site and O2 or NO photo dissociation at oxide ion vacancy is responsible for the enhanced catalytic activity. © 2007 American Chemical Society.