A bifunctional Pd/MgO-ZrO2 catalyst was developed for the single-reactor, aqueous phase aldol-condensation and hydrogenation of carbohydrate-derived compounds, furfural and 5-hydroxymethylfurfural (HMF), leading to large water-soluble intermediates that can be converted to liquid alkanes. The cross aldol-condensation of these compounds with acetone results in formation of water-insoluble monomer (C-8-C-9) and dimer (C-13-C-15) product species, which are subsequently hydrogenated in the same batch reactor to form water-soluble products with high overall carbon yields (> 80%). After a cycle of aldol-condensation followed by hydrogenation, the Pd/MgO-ZrO2 catalyst undergoes a loss in selectivity by 18% towards heavier product (dimer) during subsequent runs. However, the catalytic activity and dimer selectivity are completely recovered when the catalyst is recycled with an intermediate calcination step at 873 K. The optimum temperatures for aldol-condensation of furfural with acetone and for condensation of HMF with acetone are 353 and 326 K, respectively, representing a balance between dimer selectivity and overall carbon yield for the process. The product selectivity can be controlled by the molar ratio of reactants. When the molar ratio of furfural-acetone increases from 1:9 to 1:1, the selectivity for the formation of dimer species increases by 31% and this selectivity increases further by 12% when the ratio increases from 1:1 to 2:1. It is likely that this active, stable, and heterogeneous catalyst system can be applied to other base and/or metal catalyzed reactions in the aqueous phase. (c) 2006 Elsevier B.V. All rights reserved.