Al-MCM-41 supported ceria samples of various cerium content (0.2, 0.3, 0.5, 0.8 and 3.0 wt.%) were prepared by impregnation and are characterized by BET, XRD, UV-VIS DRS, XPS and ESR techniques. At lower cerium contents the DRS clearly shows a blue shift of 50 nm in the absorbtion edge of CeO2 indicating the size quantization and high dispersion of cerium particles. The XPS analyses of Ce-Al-MCM-41 samples revealed the interaction of cerium with Al-MCM-41 in Ce3+ stop state and at higher loadings in Ce3+/4+ stop states. ESR studies also further substantiated this observation. These catalysts when subjected to photo degradation activity of phenol, 0.3 wt.% Ce-Al-MCM-41 is showing maximum degradation among all the catalysts tested. The present study highlights that cerium at lower loadings is in +3 oxidation state and is dispersed highly showing good photocatalytic activity in comparison with pure ceria.