The influence of palladium incorporation technique on hydroisomerization of n-butane over bifunctional Pd/HZSM-5 catalysts agglomerated with bentonite was studied to analyse the effect that it has on the catalytic activity. Temperature-programmed desorption of ammonia (TDPA), temperature-programmed reduction (TPR), atomic absorption (AA) spectroscopy, and surface area measurements were used to characterize the catalysts. Pd/HZSM-5/bentonite catalysts were prepared using the impregnation, ion exchange and solid-state ion exchange methods. The impregnated catalyst shows the highest activity. However, the catalysts prepared by solid-state ion exchange had the lowest catalytic activity. Probably, there is not a good mixture between the metal and zeolite for these samples, so that the conversion decreases. (C) 2004 Elsevier B.V. All rights reserved.