This study aims at synthesizing a new by substituting 1 atom% Pd2+ in ionic state in TiO2 in the form of Ti0.99Pd0.01O1.99 with oxide-ion vacancy. The catalyst was synthesized by solution combustion method and was characterized by XRD and XPS. The catalytic activity was investigated by performing CO oxidation, hydrocarbon oxidation and NO reduction. A reaction mechanism for CO oxidation by O2 and NO reduction by CO was proposed. The model based on CO adsorption on Pd2+ and dissociative chemisorption of O2 in the oxide-ion vacancy for CO oxidation reaction fitted the experimental for CO oxidation. For NO reduction in presence of CO, the model based on competitive adsorption of NO and CO on Pd2+, NO chemisorption and dissociation on oxide-ion vacancy fitted the experimental data. The rate parameters obtained from the model indicated that the reactions were much faster over this catalyst compared to other catalysts reported in the literature. The selectivity of N2, defined as the ratio of the formation of N2 and formation of N2 and N2O, was very high compared to other catalysts and 100% selectivity was reached at temperature of 350 °C and above. As the N2O + CO reaction is an intermediate reaction for NO + CO reaction, it was also studied as an isolated reaction and the rate of the isolated reaction was less than that of intermediate reaction. © 2007 Elsevier B.V. All rights reserved.