Pd-In2O3 catalysts are among the most promising alternatives to Cu-ZnO-Al2O3 for synthesis of CH3OH from CO2. However, the intrinsic activity and stability of In2O3 per unit mass should be increased to reduce the content of this scarcely available element and to enhance the catalyst lifetime. Herein, we propose and demonstrate a strategy for obtaining highly dispersed Pd and In2O3 nanoparticles onto an Al2O3 matrix by a one-step coprecipitation followed by calcination and activation. The activity of this catalyst is comparable with that of a Pd-In2O3 catalyst (0.52 vs 0.55 gMeOH h−1 gcat-1 at 300 °C, 30 bar, 40,800 mL h−1 gcat-1) but the In2O3 loading decreases from 98 to 12 wt% while improving the long-term stability by threefold at 30 bar. In the new Pd-In2O3-Al2O3 system, the intrinsic activity of In2O3 is highly increased both in terms of STY normalized to In specific surface area and In2O3 mass (4.32 vs 0.56 g gMeOH h−1 gIn2O3-1 of a Pd- In2O3 catalyst operating at 300 °C, 30 bar, 40,800 mL h−1 gcat-1).The combination of ex situ and in situ catalyst characterizations during reduction provides insights into the interaction between Pd and In and with the support. The enhanced activity is likely related to the close proximity of Pd and In2O3, wherein the H2 splitting activity of Pd promotes, in combination with CO2 activation over highly dispersed In2O3 particles, facile formation of CH3OH.