A biphasic approach to the dehydroaromatization of bioderived limonene into water-insoluble p-cymene using soluble Pd nanoparticle catalysts in an aqueous phase (>= 150 degrees C, 2 bar H-2) was successfully achieved with a conversion of 93% and a selectivity of 82%. The Pd nanoparticles, operating under forcing conditions (180 degrees C, 2 bar H-2), can be recycled at least four times without noticeable degradation. The effects of temperature, pressure, reaction time, pH, catalyst concentration, metal type, the type and amount of polymer stabilizer, and the preparation method were systematically investigated to optimize the process and provide insight into the mechanisms involved. (C) 2008 Elsevier Inc. All rights reserved.