The formation and catalytic properties of well-dispersed palladium (Pd) nanoparticles in water-in-oil (w/o) microemulsions containing octadecyl amine polyoxyethylene ether (OAPE-5) and hydrogenated tallow amine (HTA) have been investigated. The size and structure of the nanoparticles were characterized by TEM and XRD analyses and the effects of microemulsion composition on particle sizes were assessed using FTIR spectroscopy. The results of TEM and XRD indicated that the particles were of a face centered cubic structure form and their mean diameter was 10 nm. Results of FTIR analysis indicated strong interactions between Pd nanoparticles and surfactant molecules. Use of these Pd nanoparticles for the hydrogenation of o-chloronitrobenzene in the presence of alkali produced a 3:1 ratio of aniline to o-chloroaniline and none of the frequently observed nitrobenzene or 2.2'-dichlorohydrazoebenzene. (C) 2010 Elsevier B.V. All rights reserved.