Bimetallic Pd-Y nanoparticles were synthesized by yttrium precursor reduction on the surface of colloidal Pd seeds catalyzed by palladium hydride. The addition of yttrium improved the thermal stability of the Pd nano particles to agglomeration. The nanoparticles before and/or after deposition on alumina were characterized by TEM, XPS, STEM with elemental mapping, temperature-programmed reduction, CO chemisorption and CO DRIFT spectroscopy. The supported catalysts were evaluated in hydrodesulfurization (HDS) of 4,6-dimethydibenzothiophene at 350 degrees C and 1 MPa. Yttrium addition did not alter the overall HDS rate but increased the direct desulfurization selectivity from 71% to 84% and suppressed cracking twice as much as monometallic Pd catalyst did. The study demonstrates that PdY structures could be a promising candidate for low-pressure HDS of refractory sulfur compounds.