The reaction of 2,2-dimethylpropane with dihydrogen has been studied over a series of well-characterized Pd-Fe/SiO2 catalysts. The overall activity of Pd-Fe/SiO2 strongly decreases with increasing iron content. At the same time, the selectivity towards isomerization passes through a maximum, resembling the catalytic behaviour of Pd-Co/SiO2. The effect of time-on-stream on the catalytic activity was also investigated. The samples rich in iron, i.e. with the Fe content > 50 at-%, become gradually more active whereas the samples rich in palladium deactivate with increasing time-on-stream. All these results demonstrate the presence of dispersed Pd-Fe alloys in samples reduced at 450 degrees C. In the case of iron-rich Pd-Fe/SiO2 catalysts, oxidation prior to reduction causes a pronounced decrease in isomerization selectivity. It seems that the oxidation leads to a considerable separation of two metal components and a subsequent reduction does not fully restore the extent of alloying of Pd with Fe in samples reduced at 450 degrees C.