Difficulties in oxidizing Pd surfaces in ultrahigh vacuum (UHV) have limited fundamental studies of the surface reactivity of PdO, despite the importance of PdO in the catalytic oxidation of methane and CO. In this talk, I will discuss recent results in which we generated a crystalline PdO(101) thin film on Pd(111) by oxidizing the metal with an atomic oxygen beam at 500 K, and then examined the adsorption and reactions of O2 and H2O on the PdO(101) surface. Our results show that O2 molecules chemisorb intact on PdO(101) and bind relatively strongly, desorbing at temperatures up to 315 K. Molecularly chemisorbed O2 dissociates negligibly on PdO(101) during sample heating, but we find that both PdO and molecularly chemisorbed O2 actively participate in CO oxidation. We also show that the dissociation of H2O is facile on PdO(101), and produces strongly bound OH groups that recombinatively desorb at about 350 K. Our experiments provide evidence that the molecules studied adsorb selectively to coordinately unsaturated Pd sites of the PdO(101) surface.