The selective oxidation of alcohols finds widespread application in the fine chemical and food industries for the synthesis of valuable intermediates. These processes traditionally employ stoichiometric quantities of toxic or hazardous reagents, generating harmful waste with associated safety and disposal cost issues. Heterogeneous catalysts are a promising alternative clean technology offering both process advantages, in terms of catalyst separation/recovery and the use of cheap and safe oxidants such as dioxygen or even air, together with enhanced reaction selectivity. Supported palladium is highly selective for the aerobic partial oxidation of allylic alcohols under mild conditions. However, despite much promise these heterogeneous catalysts deactivate rapidly, hindering their commercialisation. A number of fundamental issues relating to the nature of the active phase, and origin of the deactivation process must be addressed in order to overcome this limitation. Furthermore poisoning may occur through the accumulation of irreversibly bound by-products, surface corrosion and leaching of the active phase, or catalyst over-oxidation. Through combined surface science studies over model palladium surfaces, and corresponding X-ray measurements on dispersed Pd/Al2O3 catalysts, we have identified the active site in the selective oxidation of cinnamyl and crotyl alcohols to their respective aldehydes. XAS and XPS reveal that efficient oxidative dehydrogenation is crucially dependent on the presence of Pd(II) active sites, in the form of a metastable surface PdO. Catalyst deactivation is associated with palladium oxide reduction; this exposes metallic Pd(0) surface sites which are highly reactive towards aldehyde decarbonylation, and result in the accumulation of adsorbed CO/alkylidynes and associated self-poisoning. Palladium nanoparticle sintering accompanies this Pd(II) → Pd(0) transition. This insight has allowed us to develop exceptionally active heterogeneous Pd catalysts utilising a mesoporous alumina support to stabilise atomically dispersed Pd(II) centres (Figure 1). The result is a 10-fold activity enhancement under mild reaction conditions, and catalytic materials offering new green chemical solutions to diverse industrial processes.