Specific activities for CO oxidation by molecular oxygen over unreduced PdCl 2:CuCl 2 catalysts are higher than on the reduced bimetallic catalysts. This activity is further enhanced by 1–3 orders of magnitude by addition of H 2O vapor to the feed, thus producing very active catalysts at 300 K. The role of the water is twofold: it dissolves the Pd and Cu precursor compounds in a very thin, two-dimensional aqueous layer on the support surface and it also reacts directly with PdCICO, which was identified by IR spectroscopy. Based on this picture, the use of a higher surface area, more hydrophobic carbon support gave the most active catalyst of all. Based on the species detected by IR spectroscopy and their interactions with the reactants as well as a complete kinetic study coupled with recent results reported in the literature, reaction models applicable to the presence and absence of H 2O vapor are proposed. Both O 2 and H 2O are oxidants in the former sequence whereas only molecular oxygen is involved in the catalytic cycle in the latter situation. The principal role of Cu is the reoxidation of Pd (O) when H 2O vapor is present, as in the Wacker process, whereas it appears to be involved as a reactive intermediate also containing Pd, CO, and O 2 in the absence of H 2O vapor.