Progress in the use of ATR-IR spectroscopy to improve the understanding of liquid-phase heterogeneous catalytic reactions is illustrated using the example of the oxidation of benzyl alcohol over Pd/Al2O3 and Bi–Pd/Al2O3. The in situ studies performed in both batch and continuous reactor cells provide rich information on the reaction pathway and important facets of the mechanism, such as the nature of active Pd sites and the effect of the Bi-promoter. The combination of CO site blocking prior to reaction and isotopic labeling suggests that alcohol dehydrogenation occurs uniformly over Pd nanoparticles, but only selected sites may allow desorption of the product benzaldehyde thus providing the required selectivity. Promotion of Pd/Al2O3 using bismuth produces infrared spectra free of adsorbed CO. This information demonstrates that Bi is deposited on selected adsorption sites (terraces rather than defects) and simultaneously confirms that open terraces favor product decomposition. Experiments performed in the continuous reactor cell using different catalyst film thickness show that reactions can be studied under kinetic or mass transfer limited conditions depending on catalyst film thickness. This allowed to study the alcohol oxidation under conditions of oxygen diffusion limitation, which are preferably applied in praxis in order to prevent catalyst deactivation by over-oxidation.