A series of alumina supported Pd catalysts were prepared by the novel deposition-precipitation method adopting the chloride precursor (DP-Cl) of Pd and varying the metal content from 0.25 to 1.0 wt%. The catalytic properties of prepared catalysts were studied by various characterization techniques such as N-2 adsorption, CO chemisorption, TPR, XRD, XPS, and TEM techniques. The activity and stability of the catalysts were evaluated for the gas phase hydrodechlorination (HDC) of chlorobenzene operating at atmospheric pressure. At 1 wt% of Pd the catalyst showed higher chlorobenzene conversion with good stability when tested for a period of 25 h, whereas the other catalysts exhibited a loss in activity with time. In order to elucidate the exceptional activity and stability of this catalyst, a few more catalysts with 1 wt% Pd were prepared by impregnation technique and also using a non-chloride precursor, palladium nitrate. The 1 wt% DP-Cl catalyst again was found to be the best among the others. The activity and stability of the DP-Cl catalyst was also found to be superior to two low-dispersed catalysts, each with 10 wt% Pd, prepared by conventional impregnation method using the chloride and nitrate as the precursors. The characterization results reveal that the high activity and stability of the DP-Cl catalyst is related to the formation of electron deficient Pd species and its stabilization in the octahedral vacancies of alumina.