Mass spectroscopic analysis revealed that Pd clusters passivated by thiolates and the stoichiometric thiolate complexes, Pd-n(SR)(2n) (n = 5, 6), are formed in the reactions between palladium chloride and n-alkanethiols (RSH:R = n-C18H37 n-C12H25) in toluene. The Pd clusters thus formed are formulated as Pd-n(SR)(m) with m similar to 0.6n. The cluster sizes, distributed in the range of 5 less than or equal to n less than or equal to 60, are consistent with their core diameters of similar to 1 nm observed by TEM. A gap of similar to 2 eV was observed in the optical transition of the Pdn(SR) clusters showing the emergence of non-metallic properties as a result of size reduction. (C) 2002 Elsevier Science B.V. All rights reserved.