Hydrogenation of toluene proceeded with hydrogen derived from the electrolysis of water with an electrical cell that a hydrogen permeable palladium membrane was the cathode. The hydrogenation occurred with selectively permeated hydrogen through the membrane in a catalytic layer at more than 313K and the rate of hydrogenation increased with increasing temperature. This system was stable at least several hours and about a half of hydrogen produced by the electrolysis can be used for hydrogenation.