The effect of palladium-gallia interaction in Pd(1 wt.%)/beta-Ga2O3 during selective methanol synthesis by CO2 hydrogenation was studied. A detailed quasi-in situ transmission electron microscopy analysis of the as-prepared H-2-reduced catalyst, without exposing it to air, showed that Ga-Pd bimetallic (nano)particles were formed under a reductive atmosphere at or above 523 K. However, these particles were unstable; upon air exposure, a dramatic and extensive encapsulation of the metallic crystallites by Ga2O3 occurred. In addition, the function of the bimetallic particles in the mechanism of methanol synthesis was investigated by in situ infrared spectroscopy at 0.7 MPa. The results confirmed those of previous studies in which the stepwise hydrogenation of (bi)carbonate to formate and then to methoxy groups on the Ga2O3 surface took place via a bifunctional pathway. In this pathway, the role of the Ga-Pd bimetallic crystallites was to provide atomic hydrogen, via spillover, to the oxidic surface and to hamper both CH3OH decomposition and CO production. (C) 2012 Elsevier Inc. All rights reserved.