SnO2 system is known to be very universal in gas sensing applications. Sensing properties can be improved by adding of a small amount of transition metals. The exact mechanism of this enhancement is not known yet. In this work we used X-ray photoelectron spectroscopy to study the chemical state changes during heating in usual and hydrogen containing atmosphere on Pd-doped SnO2 powder prepared by microwave irradiation wet method. Reversible oxidation and reduction of Pd additive during the treatment were observed. We found out a dependence of the redox process on heating temperature and gas mixture proportion.