Palladium particles incorporated into organophilic montmorillonite (Pd-M) were prepared via a novel synthetic method, mediated by a cationic surfactant stabilizer. The materials were characterized by UV-Vis, ICP-AES, and TEM. Two representative samples (Pd-M1 and Pd-M2), with metal contents of 0.1% and 0.46%, respectively, were investigated in detail. TEM measurements indicated that the diameters of the Pd particles observed were in the range 1.5-6 nm. It is suggested that most of the Pd particles are situated on the external surface of the clay lamellae. Both Pd-M samples exhibited marked catalytic activities and stereoselectivities in the liquid-phase hydrogenation of 1-phenyl-1-butyne. For the production of the cis-alkene stereoisomer, Pd-M2 proved to be less active but more stereoselective than Pd-M1. The stereoselectivities obtained for Pd-M2 in n-hexane (86-88%) were nearly as high as those experienced for the Lindlar catalyst.