Novel palladium catalysts prepared from complexes of the type M2PdCl4(M = alkali metal) have been studied which produce methanol selectively from CO + H2 mixtures even below atmospheric pressure. The catalytic activity for methanol formation depends sharply on the alkali-metal cation in the following order: Li > Na K > Rb > Cs. It also depends on the support, exhibiting higher activities with more acidic supports such as alumina and silica–alumina than silica. Different behaviour for methanol and methane formation suggests that different reaction sites operate in each case. Infrared spectroscopic techniques were applied to elucidate the mechanism of the overall reaction, and the behaviour of formate ion on the catalyst, which could be observed under the reaction conditions, was examined.