1-wt% Pd-CeO(2) catalysts were prepared by co-precipitation of Pd nanoparticles with ceria (Pd@CeO(2)-CP), by a microemulsion procedure (Pd@CeO(2)-ME), and by normal impregnation of Pd salts (Pd/CeO(2)-IMP) in order to test the concept that Pd-CeO(2) catalysts could be more stable for the water-gas-shift (WGS) reaction when the Pd is embedded in CeO(2). Initial WGS rates measured at 250 degrees C were similar for the Pd@CeO(2)-CP and Pd/CeO(2)-IMP, indicating that Pd was accessible for gas-phase reactions on both catalysts. Pd@CeO(2)-CP exhibited better stability for WGS than did Pd/CeO(2)-IMP but exposure to the WGS environment at 400 degrees C still caused a decrease in activity. Physical characterization of the Pd@CeO(2)-ME implied that the core-shell nanoparticles underwent condensation that resulted in a low surface area and poor Pd accessibility. However, the Pd@CeO(2)-ME sample exhibited good stability for WGS, suggesting that more effective encapsulation of Pd can limit the sintering of the metal phase, thus resulting in stable catalysts under high temperature reaction conditions.