The control of low-concentration methane (CH4) emissions is a critical component of the ‘dual carbon’ strategy, and catalytic combustion technology focused on catalyst design is recognized as a promising avenue for achieving it. However, the zeolite-based catalysts are highly prone to deactivation under hydrothermal environments, thus limiting their practical applicability. Herein, we have utilized layered double hydroxides (LDHs) as precursors and integrated them with Pd/M through a co-precipitation method to fabricate Pd/M@CoAlO composite catalysts with a core–shell structure, focused on the impact of CoAlO morphology on the activity and stability for CH4 oxidation. It revealed that the incorporation of CoAlO significantly enhanced the catalytic combustion efficiency and the hydrothermal stability of Pd/M. Furthermore, an increase in the calcination temperature led to a progressive degradation of the sheet-like or petal-shaped structure of CoAlO within the Pd/M@CoAlO composite catalysts. This structural collapse eventually resulted in the formation of CoAlO dense particles that enveloped the Pd/M, adversely affecting the adsorption of oxygen and the exposure of active sites. This work underscores the importance of morphological control, providing significant guidance for the strategic design and development of catalysts tailored for CH4 catalytic combustion.