With x-ray spectroscopy and first-principles calculations, we expose the electronic structure, near the Fermi level, of Co-doped PbPdO2 composed of O 2p-Pd 4d hybridized states with an additional contribution of a spin-polarized Co 3d state at either a greater or smaller energy. The spin-polarized Co 3d states interacting with O 2p-Pd 4d hybridized states cause spin splitting at the band edge. Fascinating physical properties such as high-temperature ferromagnetism thus arise in Co-doped PbPdO2. Results will help in the design of materials with desired electronic structures and the control of spin polarization with chemical doping.