Ultrafine palladium particles can be deposited on mesoporous cerium oxide by a deposition-precipitation method. After reduction with hydrogen at 300degreesC, palladium on the mesoporous compound is cationic with a valence close to +1 whereas the particles have a metallic structure. The catalytic activity in selective methanol decomposition to hydrogen and carbon monoxide at 180degreesC is significantly higher than that of palladium supported on non-porous cerium oxide, suggesting that the mesoporous structure is advantageous to the reaction. When the palladium content is high, part of mesopores are probably choked with large palladium particles, which will cause saturation of the activity.