A novel application of phosphotungstic acid, H3PW12O40 (PWA) supported on MCM-41 molecular sieve as a solid acid catalyst has been demonstrated for the synthesis of phenolphthalein by hydroxyalkylation of phenol and phthalic anhydride. PWA/MCM-41 (20%) showed the highest activity as compared to that of parent PWA and MCM-41 individually, due to the excellent dispersion of PWA on MCM-41 leading to the redistribution of Bronsted and Lewis acid sites on MCM-41. The effect of PWA loading on phthalic anhydride conversion and phenolphthalein selectivity was also studied. All these prepared catalysts were characterized by XRD, N-2 adsorption-desorption isotherm, pyridine-FTIR, and NH3-TPD. The effect of various reaction parameters, namely, mole ratios, catalyst concentration, temperature, reaction time, and percentage of PWA present in the catalysts on conversion and selectivity of products has been also investigated. The utility of 20% PWA/MCM-41 catalyst was established by its efficient activity for hydroxyalkylation of phenol and p-cresol with formaldehyde to the corresponding dihydroxydiarylmethane products.