The adsorption and thermal behavior of NO on `flat¿ Pd(111) and `stepped¿ Pd(112) surfaces has been investigated by temperature programmed desorption (TPD), high resolution electron energy loss spectroscopy (HREELS), and electron stimulated desorption ion angular distribution (ESDIAD) techniques. NO is shown to molecularly adsorb on both Pd(111) and Pd(112) in the temperature range 100¿373 K. NO thermally desorbs predominantly molecularly from Pd(111) near 500 K with an activation energy and pre-exponential factor of desorption which strongly depend on the initial NO surface coverage. In contrast, NO decomposes substantially on Pd(112) upon heating, with relatively large amounts of N2 and N2O desorbing near 500 K, in addition to NO. The fractional amount of NO dissociation on Pd(112) during heating is observed to be a strong function of the initial NO surface coverage. HREELS results indicate that the thermal dissociation of NO on both Pd(111) and Pd(112) occurs upon annealing to 490 K, forming surface-bound O on both surfaces. Evidence for the formation of sub-surface O via NO thermal dissociation is found only on Pd(112), and is verified by dissociative O2 adsorption experiments. Both surface-bound O and sub-surface O dissolve into the Pd bulk upon annealing of both surfaces to 550 K. HREELS and ESDIAD data consistently indicate that NO preferentially adsorbs on the (111) terrace sites of Pd(112) at low coverages, filling the (001) step sites only at high coverage. This result was verified for adsorption temperatures in the range 100¿373 K. In addition, the thermal dissociation of NO on Pd(112) is most prevalent at low coverages, where only terrace sites are occupied by NO. Thus, by direct comparison to NO/Pd(111), this study shows that the presence of steps on the Pd(112) surface enhances the thermal dissociation of NO, but that adsorption at the step sites is not the criterion for this decomposition.