Palladium supported MCM-41 molecular sieves with Si/Pd (molar) ratios of 400, 200, 100 and 50 were synthesized by hydrothermal method. All catalysts characterized by various analytical and spectroscopic techniques, viz, XRD, N2 sorption, TEM, DRUV-VIS, Raman. XRD at low angle and high angle studies suggest that the substitution of palladium and presence of palladium oxide phase in the silicate tetrahedral framework structure of MCM-41. TEM investigations confirm the highly ordered cubic structure with irregular distribution of palladium nanoparticles on surface PdMCM-41. DRUV-VIS and Raman spectra studies indicate the presence of palladium oxide moieties in all PdMCM-41 catalysts. The effect of Si/Pd molar ratio, particle size and reusability with respect to reactor temperature on the catalytic activity of PdMCM-41 catalyst was examined. Comparative study of all these palladium substituted catalysts shows that PdMCM-41(50) catalyst having higher palladium contents shows higher activity at lower temperatures as compared with other PdMCM-41 (Si/Pd = 100, 200, 400) catalysts. © 2011 World Scientific Publishing Company.