The atomic structure of MoO$_x$ films formed upon a gradual thermal reduction of an ordered MoO$_3$ monolayer on the Pd(100) substrate was explored via surface science characterization techniques and density functional theory (DFT) calculations. Two main reduction stages were identified. First, the initial oxygen excess was gradually eliminated by altering the domain boundary length, orientation, and atomic structure. The films nevertheless remained O-rich, with numerous terminal oxygen atoms (formation of Mo=O groups), and an elevated work function. Second, multiple ordered O-lean phases were formed, characterized by either very few or no terminal oxygen atoms, and a much smaller surface work function. According to calculations, the positive charging of the Pd substrate stabilizes the oxygen excess during the first stage, but during the second reduction stage, the substrate becomes negatively charged, stabilizing enhanced cation oxidation states. On their basis, the mechanisms underlying the oxygen release from the initial c(2x2) domains were disclosed. The experiments showed that the film reduction is perfectly reversible, which highlights the very promising properties of the MoO$_3$/Pd system for heterogeneous catalysis.