A combination of in situ attenuated total reflection infrared (ATR-IR) spectroscopy and X-ray absorption spectroscopy (XAS) was applied to study the effect of Bi on the evolution of surface species and on the structure of a 0.75 wt% Bi–5 wt% Pd/Al2O3 catalyst during liquid-phase aerobic oxidation of benzyl alcohol. To correlate structure and catalytic performance, both spectroscopic techniques were coupled with online measurements of the catalytic activity using FTIR spectroscopy. Compared with 5 wt% Pd/Al2O3, hardly any adsorbed CO was found in the infrared spectra of the Bi-promoted catalyst recorded under dehydrogenation conditions. This indicates that the major effect of Bi on surface species is to block sites responsible for benzaldehyde decarbonylation. XAS showed that both Bi and Pd are in the reduced state under these conditions, as in the unpromoted catalyst. Under aerobic conditions, both ATR-IR and XAS indicated that Bi controls the supply of oxygen to the noble metal. As a consequence, the Bi-promoted Pd/Al2O3 catalyst was more resistant against overoxidation and thus was active for longer time on stream in the presence of an excess of oxygen. Pd remained in the metallic state over a wide range of experimental conditions. Reoxidation was found only after feeding an alcohol-free oxygen-saturated solution and was associated with lower catalytic activity when the alcohol was readmitted under aerobic conditions. Finally, the formation of carboxylates from benzaldehyde hydration/oxidation was largely hindered in the presence of Bi. This study demonstrates the potential of the combination of the two techniques, which allows drawing conclusions on both the particle structure/oxidation state (by XAS) and the surface species (by ATR-IR), and thus a correlation with catalytic performance.