Palladium nanoparticle catalysts prepared using colloidal synthesis routes are characterized in terms of their stability with and without a surfactant as well as their catalytic activity after different treatments. The palladium colloidal nanoparticles were synthesized through a novel mesityl route, combining palladium (II) chloride with magnesium bromide mesityl to form palladium mesityl and magnesium bromochloride as a precipitate. The palladium nanoparticles formed are stabilized by the surfactant TOP – trioctylphosphine. Supported on alumina substrates, the colloidal nanoparticle samples were analyzed for catalytic activity for CO oxidation. TEM, STEM, particle size using light scattering and XRD were used to characterize the palladium nanoparticles. Samples were examined before and after thermogravimetric analysis (TGA), as well as before/after CO oxidation using TEM and STEM imaging. The particle size distribution of the Pd/Al2O3 catalyst after reactivity measurements was very similar in the presence and after removal of the surfactant (TOP). We also show that the surfactant used to stabilize the particles and prevent sintering results in lowering the Pd nanoparticles activity for CO oxidation. The colloidal synthesis method allows for fine control over the Pd nanoparticles size using different surfactant. However, the surfactant removal is crucial for the supported particles in gas phase reactions.