Although Pd/Fe bimetallic catalysts have been extensively studied in vapor-phase hydrodeoxygenation of phenolics (i.e., guaiacol, cresol), little is yet known about their performance in liquid-phase reactions. In this work, we present a mechanistic study on the Pd/Fe bimetallic catalysts in liquid-phase hydrodeoxygenation of phenolics. The role of tautomerization in hydrodeoxygenation of the lignin-derived phenolics, particularly for ring saturation, is systematically studied by employing two representative modeling compounds: phenol (a molecule that is keto-enol tautomeric) and diphenyl ether (a molecule that does not allow ketol-enol tautomerization). It was found that although the addition of oxyphilic Fe inhibits the direct aromatic ring saturation reaction typically occurring on Pd, tautomerization opens another reaction pathway toward ring saturation products (i.e. cyclohexanone, cyclohexanol, cyclohexane et al.), where both tautomerization and the hydrogenation of keto isomers are significantly enhanced to produce cyclohexanol followed by direct hydrogenolysis of the cyclohexanol to cyclohexane.