The water forming reaction (WFR) between oxygen and hydrogen on metal surfaces is an important reaction in heterogeneous catalysis. Related research mostly focused on crystalline metal surfaces and thick films, however, supported nanoparticles (NP) have been rarely considered as well as a possible influence of the support on the NP catalytic activity. Here, we report on the WFR on graphite supported palladium NPs and nanoislands (NI), which are characterized at room temperature and under ultrahigh vacuum conditions (UHV) by scanning tunneling microscopy (STM), noncontact atomic force microscopy (nc-AFM), Kelvin probe force microscopy (KPFM) and X-ray photoemission spectroscopy (XPS). We show that during the first cycles of sequential O 2 and H 2 pulses, atomic H reacts off preadsorbed atomic O, which can be followed by KPFM via monitoring the change of work function (WF) at the NPs and NIs. However, after a few WFR cycles, the WF changes get smaller and the mean WF of the Pd increases due to an irreversible deactivation of the catalyst: a filament structure is formed on the facets by O and C, which the latter gets probably released from the graphite during the WFR. In strong contrast to the Pd/graphite catalyst, the WFR can be followed without any changes during an unlimited amount of cycles on a carbon-free Pd/cerium oxide/Cu(111) catalyst, which clearly shows that the support plays a role in the WFR on nanometer sized Pd catalysts.