The rational design of catalyst materials is of great industrial significance, yet there is a fundamental lack of knowledge in some of the most well-established processes, e.g. formation of supported nanoparticle structures through impregnation. Here, the choice of precursor has a significant influence on the resulting catalytic properties of the end material, yet the chemistry that governs the transformation from defined molecular systems to dispersed nanoparticles is often overlooked. A spectroscopic method for advanced in situ characterization is employed to capture the formation of PdO nanoparticles supported on γ-Al2O3 from two alternative molecular precursors - Pd(NO3)2 and Pd(NH3)4(OH)2. Time-resolved diffuse reflectance infrared Fourier transform spectroscopy is able to identify the temperature assisted pathway for ligand decomposition, showing that NH3 ligands are oxidized to N2O and NO- species, whereas NO3- ligands assist in joining Pd centers via bidentate bridging coordination. Combining with simultaneous X-ray absorption fine structure spectroscopy, the resulting nucleation and growth mechanisms of the precious metal oxide nanoparticles are resolved. The bridging ability of palladium nitrate aids formation and growth of larger PdO nanoparticles at lower onset temperature (<250 °C). Conversely, impregnation from [Pd(NH3)4]2+ results in well-isolated Pd centers anchored to the support which requires a higher temperature (>360 °C) for migration to form observable Pd-Pd distances of PdO nanoparticles. These smaller nanoparticles have improved dispersion and an increased number of step and edge sites compared to those formed from the conventional Pd(NO3)2 salt, favoring a lower light off temperature for complete methane oxidation.