Silica supported cobalt, palladium and cobalt-palladium bimetallic catalysts prepared by sol/gel technique and characterized by X-ray photoelectron spectroscopy, have been investigated in the CO hydrogenation reaction at 1 bar pressure in the temperature range between 200 and 300 degrees C. It has been established that palladium facilitates reduction of cobalt which segregates to the catalyst surface to some extent. In the catalytic hydrogenation of CO over a catalyst with the ratio of Co/Pd = 2 a synergism is observed, while over cobalt and palladium catalysts alone much lower activities are measured. Over the pure cobalt sample which has a limited reducibility, only short chain hydrocarbons, mainly alkenes, are formed, whereas when palladium sites activating hydrogen, are introduced the amount of alkanes is enhanced and the chain length increases up to C-8-C-9. The limited reducibility of the cobalt is explained by the small particle size due to the preparation technique. Palladium acts in the bimetallic system not only as a component which helps cobalt reduction, but as sites activating hydrogen participating in the reaction and causes synergism. (C) 1999 Elsevier Science B.V. All rights reserved.