Palladium nanoparticles were generated in the interlamellar region of swelling 2:1 type vermiculite clay using an adsorption excess isotherm. An adsorption excess isotherm was constructed for vermiculite after exchanging the exchangeable Na+ ions in the interlamellar region using a binary liquid mixture (ethanol:toluene). Based on adsorption excess isotherm, 1% w/w palladium was intercalated into the interlamellar space of vermiculite. The Pd-intercalated vermiculite was characterized by X-ray diffraction, transmission electron microscopy and atomic absorption spectroscopy. The 1% w/w Pd-intercalated vermiculite was tested for its catalytic activity towards selective hydrogenation reactions involving some alpha,beta-unsaturated carbonyl compounds using a pulse reactor and its catalytic activity was compared with commercial 1% Pd/C. The intercalated catalyst was found to be very selective towards the desired product of unsaturated alcohols. (c) 2007 Society of Chemical Industry