Cluster models were used to represent the beta-type cationic sites of the protonated beta zeolite (H-BEA) and the loading of PdO on these sites. The properties of these clusters and the cleavage of methane C-H bond over these clusters were studied using density functional theory (DFT) method. The stability of H-BEA was enhanced due to the formation of hydrogen bonds. After PdO loading, the Pd atom bonds to four oxygen atoms among which three H-BEA framework oxygen atoms are included to form an approximate planar structure with Pd in the centre. This structure is very similar to that of bulk PdO. The acidic proton of H-BEA and the oxygen atom of PdO participate in the cleavage of methane C-H bond, indicating that PdO is the active species for the activation of methane. Over the clusters constructed in the present work, the calculated energy barriers for the cleavage of methane C-H bond are in the region between 17.54 and 21.02 kcal mol(-1). (C) 2008 Elsevier B.V. All rights reserved.