Proper management of hydrogen gas is very important for safety security of nuclear power plants. Hydrogen removal by water formation reaction on a catalyst is one of the candidates for creating hydrogen free system. We observed in situ and time-resolved structure change of palladium metal nanoparticle catalyst during the water formation reaction by using X-ray absorption spectroscopy technique. A poisoning effect by carbon monoxide on catalytic activity was also studied. We have found that the creation of oxidized surface layer on palladium metal nanoparticles plays an important role for the water formation reaction process. (C) 2016 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.