The catalytic oxidation of alcohols with molecular oxygen on supported nanometallic catalysts represents one of the green methods in a crucial process for the synthesis of fine chemicals. We have designed an experiment using physically mixed Au/AC and Pd/AC (AC=activated carbon) as the catalyst in the liquid-phase oxidation of benzyl alcohol by aerobic oxygen. The evolution of the physically mixed catalyst structures at different stages in the catalytic reaction was investigated by aberration-corrected high-resolution transmission electron microscopy and spatially resolved element mapping techniques at the nanometre scale, and they were also compared with the structure of the bimetallic alloy. For the first time we show the formation of surface Au–Pd bimetallic sites by reprecipitation of Pd onto Au nanoparticles. Negligible Au leaching was observed. The in situ structural evolution can be directly correlated to the great enhancement of the catalyst activity. Moreover, we distinguish the different behaviours of Au and Pd, thus suggesting an oxygen differentiating mechanism for Au and Pd sites. The findings are of great importance to both the understanding of the structure–activity correlation and the design of highly active catalysts in green chemistry.