An in-depth, systematic exploration of the precise role of oxygen vacancies in catalytic reactions has long been limited by the lack of controllable regulation strategies for defect engineering. Herein, the oxygen vacancy properties of Pd/CeO2-T, prepared via electrostatic adsorption, are consecutively modulated by altering the reduction temperature, while palladium is stabilized at the atomic level. A volcano-type relationship between oxygen vacancy concentration and catalytic activity for furfural hydroconversion is revealed. Moderate oxygen vacancies on CeO2, originating from low-temperature reduction, tend to adsorb furfural and activate carbonyl groups, promoting subsequent hydrogenation. With an elevated reduction temperature of 300 °C, the creation of excess oxygen vacancies induces defective CeO2 surface reconstruction, accompanied by an increase in the coordination extent of surface-unsaturated Ce. Weakened furfural adsorption on the resultant CeO2 leads to a large negative activation entropy that is surmounted for the hydroconversion, which is responsible for the decreased activity of Pd/CeO2-300. Superior catalytic performance is obtained on Pd/CeO2-100, with an optimal oxygen vacancy concentration, yielding a furfural conversion above 99% and cyclopentanone selectivity of 87%. The fundamental insight into surface defect chemistry demonstrated here will guide the design of oxygen vacancy-based catalysts and boost the development of the catalysis technology.