Identifying the active phase with the highest activity, which is long-believed to be a steady state of the catalyst, is the basis of rational design of heterogeneous catalysis. In this work, we performed detailed in situ investigations, successfully capturing the instantaneous structure–activity change in oscillating Pd nanocatalysts during methane oxidation, which reveals an unprecedented oscillatory active state. Combining in situ quantitative environmental transmission electron microscopy and highly sensitive online mass spectrometry, we identified two distinct phases for the reaction: one where the Pd nanoparticles refill with oxygen, and the other, a period of abrupt pumping of oxygen and boosted methane oxidation within about 1 s. It is the rapid reduction process that shows the highest activity for total oxidation of methane, not a PdO or Pd steady state under the conditions applied here (methane:oxygen = 5:1). This observation challenges the traditional understanding of the active phase and requires a completely different strategy for catalyst optimization.