Solvent-free aerobic oxidation of benzyl alcohol is a green approach for synthesizing fine chemicals. Pd-based catalysts are extensively investigated due to their excellent catalytic activity compared to other metal catalysts. Most researchers believe that metallic Pd species (Pd⁰) provide active centers. However, the critical role of active oxygen and the function of Pd²⁺ is neglected. Herein, supported Pd clusters on CeO₂ (Pd/CeO₂) with a stable high Pd²⁺/(Pd⁰ + Pd²⁺) ratio are prepared by atomic layer deposition (ALD). The turnover frequency (TOF) and activity on as-prepared Pd/CeO₂ catalysts in solvent-free aerobic oxidation of benzyl alcohol reach 3.50 × 10⁵ h⁻¹ and 1.85 × 10⁵ mol/(mol_Pd·h), respectively, which are much superior to previously reported results. As the Pd loading increases, the TOFs exhibit a volcano relationship with the Pd²⁺/(Pd⁰ + Pd²⁺) ratio, pointing to a dual Pd⁰ and Pd²⁺ sites catalyzed mechanism. O₂ kinetic isotopic effect and further evidence support a dual-site catalyzed oxygen-promoted β-hydride elimination mechanisms, in which benzyl alcohol is selectively adsorbed to Pd²⁺ sites and reacts with active oxygen species on nearby Pd⁰ sites during the reaction.