Structural changes of PtPd nanoparticles in a natural gas oxidation catalyst were studied at elevated temperatures in air and low-oxygen conditions and in situ using environmental transmission electron microscopy (ETEM). The fresh catalyst shows <5 nm, PtPdOx particles on the γ-Al2O3 support. At 700 °C, the noble metal oxide decomposes and Pt gets trapped by PdO particles followed by formation of metallic Pd and Pt containing particles. At 1000 °C, the particles had a metallic Pd and Pt containing core surrounded by PdO particles. In addition, the presence of <10 nm sized particles was always observed. The activity measurements indicate the decrease in activity at the elevated temperatures. ETEM studies showed significant mobility of the noble metal particles above 850 °C. Above 1100 °C, PtPd particles were mobile and smaller particles were trapped by larger ones by a particle coalescence mechanism.