A study of modified catalyst systems composed of palladium or its chloride and a co-catalyst such as metallic Fe-powder, iodine, and pyridine was used in the reduction of nitrobenzene to aniline with carbon monoxide and water at 180 degreesC and 2.5-4 MPa pressure. The reaction is complete in 2 h with a nitrobenzene conversion of 98-100% and a 100% selectivity with respect to aniline.