Catalysts containing 1 wt.% Pd supported on CeO2 were prepared by the deposition-precipitation (DP) and conventional impregnation (IMP) methods. The effect of the nature of precursor was also investigated using the chloride and nitrate salts of Pd. The catalysts were characterized by nitrogen adsorption (for BET surface area), CO chemisorption, temperature programmed reduction (TPR) and X-ray photoelectron spectroscopy (XPS). Their activity and stability was evaluated in the vapor phase hydrodechlorination (HDC) of chlorobenzene, using molecular hydrogen. The catalyst prepared by the DP method using the chloride precursor exhibited the highest stability during the reaction. Contrary to the general observation that the low dispersed catalysts are preferred for the HDC, by adopting the DP method of catalyst preparation, the present investigation demonstrates that high dispersed catalysts also offer better stability. This is a significant observation in terms of considerable reduction in Pd content of the catalyst. The higher stability is ascribed to the formation of cationic Pd species which resist deactivation. On the contrary, the IMP catalysts are susceptible for transformation into inactive palladium chloride, thus loosing stability. (C) 2003 Elsevier B.V. All rights reserved.