Formation and oxidation processes of PdZn nanoparticles on ZnO were successfully observed by means of in situ time-resolved X-ray absorption fine structure spectroscopy (XAFS), and the analysis of data on near-edge (XANES) and extended (EXAFS) structures revealed detailed changes in Pd during both processes. PdZn nanoparticles were formed on ZnO through a two-step scheme under a hydrogen atmosphere. The first process was the formation of metallic Pd nanoparticles, which was quickly finished within 1 s. The second process was the formation of PdZn nanoparticles, which took several tens of minutes. Oxidation of the PdZn nanoparticles also consisted of two processes. Zn atoms were oxidized prior to Pd atoms and the metallic Pd nanoparticles surrounded by ZnO were formed afterwards. Oxidation of the metallic Pd nanoparticles was scarce and very slow. According to the results of kinetic analyses, the metallic Pd surrounded by ZnO was a stable species under the oxidative atmosphere.