The decomposition of methane and its conversion into higher hydrocarbons on supported Pd catalysts have been investigated. The effects of temperature, flow rate, methane content, and support materials have been examined. The dissociation of CH4 on palladium occurred above 473 K to give hydrogen, a small amount of ethane, and surface carbonaceous species. A significant fraction of hydrogen dissolved into Pd crystallites, which were released only at high temperature, T(p) = 600-700 K. The most effective catalyst in the CH4 decomposition was Pd/TiO2, whereas a larger amount of ethane was found on Pd/SiO2. Temperature programmed reactions revealed that different kinds of surface carbon are produced by the decomposition of CH4. Hydrogenation of these carbonaceous species led to the production of higher hydrocarbons.