The perovskite type oxides (nominal formula LaTi0.5Mg0.5O3) with addition of Pd were prepared by annealing the ethanol solution of precursors in nitrogen flow at 1200°C and characterized by X-ray powder diffraction (XRD), X-ray photoelectron spectroscopy (XPS) and temperature programmed desorption of NO (NO-TPD). Their activity was evaluated for NO reduction by CO under stoichiometric and oxidizing conditions and for direct decomposition of NO. Pd substituted samples exhibited high NO reduction activity and selectivity towards N2. Nearly complete elimination of NO was achieved at 200°C. Two simultaneous reactions, NO reduction by CO and direct decomposition of NO as well as two forms of NO adsorption were observed on the surface of Pd substituted perovskite samples. The distribution of Pd in different catalytically active sites or complexes on at the catalyst surface may be responsible for the proceeding of two reactions: NO reduction with CO and direct NO decomposition.