The structure, thermal stability, and catalytic behavior of a novel highly dispersed silica-supported Pd/Sn catalyst prepared by an organometallic route have been examined by X-ray photoelectron, X-ray diffraction, and X-ray absorption, fine structure spectroscopies, the latter two measurements being carried outwith an in situ reaction cell. Additional reactor measurements were performed on a more Sn-rich catalyst and on a pure Pd catalyst. Varying the temperature of reduction induced large variations in catalytic performance toward ethyne-coupling reactions. These changes are understandable in terms of the destruction of SnO2-like structures surrounding the Pd core, yielding a skin of metallic Sn which subsequently undergoes intermixing with Pd. The overall thermal and catalytic behavior of these highly dispersed materials accords well with the analogous single-crystal model system.