The hydrogenation of carbon monoxide was carried out over palladium catalysts prepared by a novel preparation method using water-in-oil microemulsion. Their catalytic performance was compared with that of the catalysts prepared by the conventional impregnation method. The size distribution of the palladium particles prepared by the microemulsion method was remarkably narrow, and the average particle size was much smaller than that prepared by the impregnation method. The catalysts prepared by the microemulsion method were found to exhibit a much higher activity for the hydrogenation of carbon monoxide than the catalysts prepared by impregnation.