A novel composite photocatalyst of indium doped cadmium sulfide dispersed on zirconium oxide has been synthesized, which shows enhanced photocatalytic activity for hydrogen generation from water. In this system, cadmium sulfide exists as a separate dispersed phase on the zirconia support. Optical absorption spectra indicate a blue shift of absorption edge for CdS and In doped CdS dispersed on ZrO2 compared to pure CdS and indium doped CdS. Among the supported CdS, In doped CdS exhibits better optical absorption property. Photocatalytic studies for hydrogen generation from water show an enhanced activity for CdS dispersed on ZrO2 and indium doping in CdS enhances the activity further. Fluorescence lifetime studies indicate that, in the supported CdS, the charge carriers have higher lifetime than that in the unsupported CdS. Photocurrent response experiments show a relatively higher current output for the In doped CdS dispersed on ZrO2 support. The enhanced photocatalytic activity of this composite sample is attributed to a combination of factors like enhanced lifetime of the photogenerated charge carriers, increased photoresponse and improved surface area. The present study leads to a new observation that the photocurrent response and photocatalytic activity of CdS and indium doped CdS are enhanced when they are dispersed on a support like ZrO2. These composites with Pd as co-catalyst exhibit a large increase in the photocatalytic activity due to the increased availability of electrons on the metal surface by the interfacial transfer of electrons from CdS to Pd, when irradiated. © 2011 The Royal Society of Chemistry.