Adsorption of ethylene on palladium, a key step in various catalytic reactions, may result in a variety of surface-adsorbed species and formation of palladium carbides, especially under industrially relevant pressures and temperatures. Therefore, the application of both surface and bulk sensitive techniques under reaction conditions is important for a comprehensive understanding of ethylene interaction with Pd-catalyst. In this work, we apply in situ X-ray absorption spectroscopy, X-ray diffraction and infrared spectroscopy to follow the evolution of the bulk and surface structure of an industrial catalysts consisting of 2.6 nm supported palladium nanoparticles upon exposure to ethylene under atmospheric pressure at 50 °C. Experimental results were complemented by ab initio simulations of atomic structure, X-ray absorption spectra and vibrational spectra. The adsorbed ethylene was shown to dehydrogenate to C2H3, C2H2 and C2H species, and to finally decompose to palladium carbide. Thus, this study reveals the evolution pathway of ethylene on industrial Pd-catalyst under atmospheric pressure at moderate temperatures, and provides a conceptual framework for the experimental and theoretical investigation of palladium-based systems, in which both surface and bulk structures exhibit a dynamic nature under reaction conditions.