Oxygen adsorption on Gd(0001) at 300 K leads to the formation of a well-ordered surface oxide with a characteristic occupied valence state, originating from hybridization between Gd 5d and O 2p states. This oxygen-induced state, which closely resembles the surface state of clean Gd(0001), has a binding energy of approximate to 0.8 eV at <(Gamma)over bar> and hence permits a detailed investigation by photoelectron spectroscopy. It exhibits a distinct temperature-dependent magnetic splitting, that remains finite above the Curie temperature. [S0163-1829(99)00629-3].