Increase in productivity of the refineries and improvement the fuel quality demands to engage isobutane as a key feedstock for producing both alkylates and oxygenated additives. Substantial growth of isobutane output via isomerization of n-butane poses a real technological challenge. The goal of this study is to investigate performance of Pd promoted sulfated zirconia catalysts (Pd-SZ) in n-butane isomerizadon. The physical-chemical characteristics of various anion-modified zirconia catalysts (XRD and IR spectra, BET surface) are presented. It was observed that Lewis acid sites of medium and strong strength and two types of Bronsted acid sites exist. Approximately 90-97% of zirconia is in tetragonal phase. The influence of parameters on conversion of n-butane and selectivity towards isobutane was investigated by varying the temperature (90-290 degrees C), pressure (15-26 bar), WHSV (0.5-5h(-1)), and molar ratio H-2/C-4 (0.08-3). Mainly, temperature and H-2/C-4 ratio are responsible for increasing the effectiveness of the process. At H-2/C-4 = 0.08-0.3 the apparent activity of Pd-SZ catalyst was high enough to reach the equilibrium conversion of n-butane to isobutane at 140 degrees C value, that is, similar to 65%. The best results were obtained on Pd-SZ granules in the form of 2 mm trilobe. Water impact and the catalyst lifetime were studied in the pilot setup. Endurance testing of Pd-SZ catalyst in course of 90 h showed its sustained operation at H2O concentration up to 20 ppm without loss of activity. The estimated process specifications on Pd-SZ catalyst were compared to a conventional process; potential benefits of making use Pd-SZ catalyst are emphasized and discussed. (C) 2013 Elsevier B.V. All rights reserved.