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Starting from subsurface Zr0-doped “inverse” Pd and bulk-intermetallic Pd0Zr0 model catalyst precursors, we investigated the dry reforming reaction of methane (DRM) using synchrotron-based near ambient pressure in-situ X-ray photoelectron spectroscopy (NAP-XPS), in-situ X-ray diffraction and catalytic testing in an ultrahigh-vacuum-compatible recirculating batch reactor cell. Both intermetallic precursors develop a Pd0–ZrO2 phase boundary under realistic DRM conditions, whereby the oxidative segregation of ZrO2 from bulk intermetallic PdxZry leads to a highly active composite layer of carbide-modified Pd0 metal nanoparticles in contact with tetragonal ZrO2. This active state exhibits reaction rates exceeding those of a conventional supported Pd–ZrO2 reference catalyst and its high activity is unambiguously linked to the fast conversion of the highly reactive carbidic/dissolved C-species inside Pd0 toward CO at the Pd/ZrO2 phase boundary, which serves the role of providing efficient CO2 activation sites. In contrast, the near-surface intermetallic precursor decomposes toward ZrO2 islands at the surface of a quasi-infinite Pd0 metal bulk. Strongly delayed Pd carbide accumulation and thus carbon resegregation under reaction conditions leads to a much less active interfacial ZrO2–Pd0 state.