Local structure around Ni in a nickel phosphide catalyst supported on K-USY was investigated by an in situ X-ray absorption fine structure (XAFS) method during the reduction process of the catalyst and the hydrodesulfurization (HDS) reaction of thiophene. In the passivated sample, Ni phosphide was partially oxidized but after the reduction, 1.1 nm diameter Ni2P particles were formed with Ni-P and Ni-Ni distances at 0.218 and 0.261 nm, respectively, corresponding to those of bulk Ni2P. In situ XAFS clearly revealed that the Ni2P structure was stable under reaction conditions and was an active structure for the HDS process.