Partial oxidation of methane to synthesis gas was investigated in order to demonstrate the catalytic behavior of Pd-Y zeolite. The Pd-Y catalyst activated by a reduction-reoxidation treatment showed excellent activity and selectivity. It was elucidated by detailed analysis of the experimental results that small clusters of Pd species formed on the zeolite could function as catalytic centers via the reversible redox mechanism between Pd and PdO.