The transient kinetics of CO oxidation by O2 over alumina-supported Pd/CeO2/ZrO2 three-way catalysts is described in the absence and presence of H2O and CO2 in the feed. Experiments were carried out in a laboratory fixed-bed reactor at 573 K, while periodically switching between a feed of 1 vol% CO in He and a feed of 0.5 vol% O2 in He with a frequency of 1/30 Hz. Separate experiments were performed with 14 vol% water in both feeds, and, as is the case with real engine exhaust gas, with 14 vol% water and 14 vol% CO2 in both feeds. The presence of water largely enhanced the reaction rate, while it was inhibited by CO2. A transient kinetic model has been developed for this catalyst, based on the experimental data. It was found that the reaction in the absence of H2O and CO2 proceeds via the same elementary steps as reported for a Pt/Rh/CeO2/¿-Al2O3 catalyst (R.H. Nibbelke, A.J.L. Nievergeld, J.H.B.J. Hoebink, G.B. Marin, Appl. Catal. B 19 (1998) 245). Only the rate coefficient for CO desorption from Pd was significantly lower, in line with literature data. Additional elementary steps were combined with the above model in order to describe quantitatively the effect of water. The present study also shows that bulk diffusion of oxygen in ceria plays a major role, when the rate is enhanced by water. The inhibition effect of CO2 could be described by a lower amount of oxygen-storage sites.