Catalytic converters are widely used to reduce the amounts of nitrogen oxides, carbon monoxide and unburned hydrocarbons in automotive emissions. The catalysts are finely divided precious-metal particles dispersed on a solid support. During vehicle use, the converter is exposed to heat, which causes the metal particles to agglomerate and grow, and their overall surface area to decrease. As a result, catalyst activity deteriorates. The problem has been exacerbated in recent years by the trend to install catalytic converters closer to the engine, which ensures immediate activation of the catalyst on engine start-up, but also places demanding requirements on the catalyst's heat resistance. Conventional catalyst systems thus incorporate a sufficient excess of precious metal to guarantee continuous catalytic activity for vehicle use over 50,000 miles (80,000 km). Here we use X-ray diffraction and absorption to show that LaFe(0.57)Co(0.38)Pd(0.05)O(3), one of the perovskite-based catalysts investigated for catalytic converter applications since the early 1970s, retains its high metal dispersion owing to structural responses to the fluctuations in exhaust-gas composition that occur in state-of-the-art petrol engines. We find that as the catalyst is cycled between oxidative and reductive atmospheres typically encountered in exhaust gas, palladium (Pd) reversibly moves into and out of the perovskite lattice. This movement appears to suppress the growth of metallic Pd particles, and hence explains the retention of high catalyst activity during long-term use and ageing.