We use first-principles density functional theory (DFT) calculations to investigate the ground state structures of both BaCeO_{3} (BC) and Pd-doped BC (BCP). The relaxed structures match closely with recent experimental scattering studies, and also provide a local picture of how the BC perovskite lattice accommodates Pd. Both stoichiometric and oxygen-deficient materials are considered, and structures with an O vacancy adjacent to each Pd are predicted to be favored. The oxidation state of Pd in each doped structure is investigated through a structural analysis, the results of which are supported by an orbital-resolved projected density of states. The vacancy stabilization by Pd in BCP is explained through redox chemistry and lattice strain relief.