Pd supported on Mg-Al hydrotalcite with different Pd loadings (0.5, 1, 2 and 5 wt.% of Pd) prepared by impregnation method were characterized by XRD, BET Surface area, CO chemisorption and TPR. The catalyst activity was studied for vapor phase hydrogenation of nitrobenzene at atmospheric pressure in the temperature range of 498-598 K. The metallic dispersion, was obtained by CO chemisorption studies. Pd particle size before and after the reaction was calculated from XRD data. From the TPR studies, it was observed that the negative signal due to the decomposition of PdR, in the low temperature region was absent due to the smaller particle size of the Pd. XRD result also indicate the presence of smaller Pd particle size in low Pd loadings which increases with Pd loading. It was observed that very low concentration of Pd supported on hydrotalcite (0.5 wt.% Pd/HT) is sufficient to get high activity towards the hydrogenation of nitrobenzene to aniline (conversion = 97% and selectivity = 98%) at 498 K. The higher activity of this catalyst was attributed to higher dispersion and lower particle size of Pd as observed from CO chemisorption and XRD results. The particle size of Pd before and after reaction is more or less same indicating that the deactivation is not due to Pd agglomeration but due to the poisoning effect of water generated during the course of the reaction. The reconstruction of hydrotalcite structure in the spent catalysts as evidenced by XRD is indication that water is formed during the reaction. (C) 2007 Elsevier B.V. All rights reserved.