Well-defined Pd/Ga-nanoparticles were prepared and used as a precursor for the methanol active component in a bifunctional syngas-to-dimethyl ether catalyst. In situ X-ray absorption spectroscopy experiments were employed both to unravel the initial formation of the active catalyst phase in reductive H-2 atmosphere and to further monitor changes of the nanoparticles under conditions of dimethyl ether synthesis at a pressure up to 20 bar (250 degrees C). The catalytic studies were conducted using simulated biomass-derived, CO-rich syngas in a continuous flow reactor, with the bifunctional catalyst offering the two types of active sites, i.e. for methanol synthesis (Pd/Ga nanoparticles) and its subsequent dehydration (gamma-Al2O3), in close proximity. As compared to the conventional Cu/Zn-based reference catalyst prepared via a similar procedure, the Pd/Ga-based catalyst showed a promising activity together with a notable stability with time on stream and a high temperature tolerance (up to 300 degrees C). A kinetic model which considers the individual reactions involved in direct DME synthesis based on power law equations was used to fit the experimental data, and the apparent activation energies were compared to the Cu/Zn-based catalyst.