A Pd/ZnO/Al₂O₃ catalyst was developed for the synthesis of methanol and dimethyl ether (DME) from syngas with temperatures of operation ranging from 250 °C to 380 °C. High temperatures (e.g. 380 °C) are of interest when combining methanol and DME synthesis with a methanol to gasoline (MTG) process in a single reactor bed. A commercial Cu/ZnO/Al₂O₃ catalyst, utilized industrially for the synthesis of methanol at 220–280 °C, suffers from a rapid deactivation when the reaction is conducted at high temperature (> 320 °C). On the contrary, a Pd/ZnO/Al₂O₃ catalyst was found to be highly stable for methanol and DME synthesis at 375 °C. The Pd/ZnO/Al₂O₃ catalyst was thus further investigated for methanol and DME synthesis at P = 34–69 bar, T = 250–380 °C, GHSV = 5000–18 000 h⁻¹, and molar feeds H₂/CO = 1, 2, and 3. Selectivity to DME increased with decreasing operating temperature, and increasing operating pressure. Higher space velocity and H₂/CO syngas feed ratios also enhanced DME selectivity. Undesirable CH₄ formation was observed, however, it could be lessen through choice of process conditions and by catalyst design. By studying the effect of the Pd loading and the Pd : Zn molar ratio the formulation of the Pd/ZnO/Al₂O₃ catalyst was optimized. A catalyst with 5% Pd and a Pd : Zn molar ratio of 0.25 : 1 has been identified as the preferred catalyst. Results indicate that PdZn particles are more active than Pd^o particles for the synthesis of methanol and less active for CH₄ formation. A correlation between DME selectivity and concentration of acid sites has been established. Hence, two types of sites are required for the direct conversion of syngas to DME: (1) PdZn particles are active for the synthesis of methanol from syngas, and (2) acid sites which are active for the conversion of methanol to DME. Additionally, CO₂ formation was problematic as PdZn was found to be active for the water-gas-shift (WGS) reaction, under all the conditions evaluated.