We report on inelastic neutron scattering measurements of the antiferromagnetic NdPd5Al2 compound. NdPd5Al2 crystallizes in the tetragonal I4/mmm space group and exhibits a distinct uniaxial anisotropy due to crystal field effects. In this study, we have revealed the crystal field energy levels of NdPd5Al2 composed of five Kramers doublets. The corresponding four inelastic excitations are located at energies 3.0 meV, 7.4 meV, 8.6 meV and 17.1 meV. We additionally interpreted the neutron spectra within a crystal field model. It has been established that the crystal field parameters found by a Monte Carlo technique and the derived ground-state wavefunctions consisting primarily of the [Formula: see text] states reproduce correctly magnetic susceptibility data.