The influence of the sulfidation temperature of dehydrated ion exchanged CoNaY on the catalytic activity and structure was studied by thiophene I-IDS activity measurements, overall sulfur analysis, temperature programmed sulfidation, Xe adsorption measurements in combination with Xe-129 NMR, EXAFS and ESR. It was shown that up to a sulfidation temperature of 573 K small highly active Co sulfide clusters were formed in the supercages. Sulfidation above 573 K led to decomposition of these Co sulfide particles by a protolysis reaction resulting in the formation of H2S and a blue colored Co compound having almost no HDS activity.