A series of sulfated zirconia samples were synthesized by a two-step sol-gel technique using zirconium propoxide as a precursor having two different concentrations, hydrolyzed with aqueous ammonia at pH 9-10 and sulfated with sulfuric acid. Effects of various synthetic parameters were studied on the structural, textural, and catalytic properties, which were determined using XRD, FT-IR, DRIFT, N-2 adsorption-desorption isotherms, and benzylation of toluene. The sol-gel technique resulted in the formation of nanocrystalline sulfated zirconia having a low crystallite size (<20 nm) predominantly in the tetragonal phase with a surface area and pore size ranging from 64 to 116 m(2)/g and 47-67 Angstrom, respectively. The amount of sulfur and the nature of the sulfur species bound with the zirconia surface were observed to play a significant role in determining the catalytic activity of a sample. Ultrasonication assisted sulfated zirconia samples prepared with a higher concentration of the metal precursor were found to be superior in higher sulfur loading and dispersion and thus had higher catalytic activity for the benzylation of toluene. Under the reaction conditions studied, benzylation of toluene was carried out by the sulfur species having an ionic configuration, which is attributed to a high sulfur content.