Pd incorporated MCM-41 type mesoporous catalytic materials were prepared by the basic and the acidic direct hydrothermal synthesis procedures using different Pd sources. Also, nanocomposite materials containing Pd nanoballs within the mesopores of the host MCM-41 were prepared following an impregnation procedure. Basic direct hydrothermal synthesis route was shown to be highly successful for the production of high surface area (over 1000 m(2)/g) Pd-MCM-41 nanocomposite materials with very high Pd/Si wt. ratios, reaching to 0.44. The nanocomposite material produced following the acidic route gave a product with a wider pore size distribution and lower surface area (about 650 m(2)/g). PdCl2 and K2PdCl4 were shown to be better Pd sources than Pd(NH3)(4)(NO3)(2) for the incorporation of Pd into the MCM-41 lattice. The surface area and the pore volume of the host MCM-41 decreased about 20% by the formation of Pd grains in the mesopores of host MCM-41, for the material prepared by the impregnation procedure and containing a Pd/Si wt. ratio of 0.12. (c) 2006 Elsevier Inc. All rights reserved.