The preparation and characterisation of Pd-ZnO catalysts for the synthesis of methanol from carbon dioxide and hydrogen has been examined. Calcination and reduction temperatures have been shown to have a major effect on conversion and selectivity in the system. Extensive characterisation shows the catalyst performance is associated with ZnO islands on a Pd interface, best prepared by deposition-precipitation. Reduction or calcination at high temperatures leads to the formation of a Pd-Zn alloy and to loss of performance