A novel material, hydrous ruthenium oxide (HRO) as potential catalyst precursor, is reported for the selective hydrogenation of levulinic acid (LA) to gamma-valerolactone (gamma-VL) in high yields under the mildest conditions in an aqueous medium. Various characterization studies such as PXRD, FT-IR, TGA, SEM, TEM and XPS show that the active catalyst, referred here as Ru-HRO is generated in situ from HRO during the reaction. Such in situ generation of the active catalyst thus avoided prior reduction or pre-treatment which is often reported for Ru-based catalysts for this reaction. It is pertinent to mention that the activity of the in situ generated catalyst is higher than the ex situ reduced catalyst. The effect of H-beta as support for HRO showed a pronounced influence on the active catalyst (Ru-HRO@H-beta) by decreasing the Ru loading required (compared to 'as such' HRO) and rendered easier separation after the reaction. Interestingly, the HRO-derived catalyst works only under aqueous medium unlike in many organic solvents reported elsewhere. A reaction mechanism is proposed by using several controlled experiments which reveal hydrogenation of LA to gamma-hydroxypentanoic acid (gamma-HP) and followed by cyclisation (intramolecular esterification) to gamma-VL with the removal of H2O. The catalyst showed similar activity upon recycling for up to five cycles and for the reaction scale (of LA) from 1 g to 200 g. Further, liquid phase continuous hydrogenation of LA to gamma-VL is successfully demonstrated using in situ generated Ru-HRO@H-beta (dual bed) in aqueous medium under optimized reaction condition (1.5 ml/min of aqueous LA feed flow (5 wt%), 100 degrees C, 10 bar H-2 and 2 ml/min flow of H-2 feed), that showed complete conversion of LA with 98-100% yield of gamma-VL for 40 h time-on-stream. Simple preparation method, milder reaction conditions, high activity, recyclability, and ability to deploy under continuous conditions makes this catalytic process attractive for industrial production of gamma-VL.