In this study, Pd has been adopted to modify Bi2Zr2O7 pyrochlore on the surface (Pd/Bi2Zr2O7) or in the bulk (Pd-Bi2Zr2O7) by using different methods. Compared with the unmodified Bi2Zr2O7, the addition of Pd significantly improves the reactivity, following the sequence of Bi2Zr2O7 < Pd-Bi2Zr2O7 < Pd/Bi2Zr2O7. For Pd/Bi2Zr2O7, both PdO and metallic Pd0 are formed and located mainly on its surface, which is favorable for the activity. In contrast, for Pd-Bi2Zr2O7, the Pd species are majorly doped into the pyrochlore matrix at B-site as Pd2+ and Pd4+, which in fact restricts the activity. Furthermore, Pd modification can promote the generation of active O2− and O22- species, especially when Pd locates on the surface. As discovered, the distribution locations and valence states of Pd, together with the number of reactive surface oxygen sites, determines the activity.