Cumene is a commercially important product in the petrochemical industries. In isopropylation of benzene, 1,4-diisopropyl benzene (1,4-DIPB) is produced as low value by-product. This low value by-product DIPB is used to maximize the production of commercially important product cumene by transalkylation reaction. Reduction of crystal size in zeolite can increase surface area of the external surface and in this way bring about substantial changes in catalytic activity. Moreover modification with rare-earth metal enhances the acidity of zeolite. In this work, nanocrystalline and microcrystalline zeolite X were modified with cerium to study the combine effect of crystal size and ion modification of zeolite on selectivity of cumene in commercially important transalkylation reaction. Benzene and 1,4-diisopropylbenzene in a molar ratio of 1 to 12.5 were subjected to vapour-phase reaction in the temperature range of 498 to 593 K at atmospheric pressure with space time of 5.27–10.54 kg h/kmol. Nanosized crystalline zeolite gives much higher conversions of 1,4-DIPB than microcrystalline zeolite. Over cerium modified nanosized zeolite CeXN 81.85% conversion of 1,4-DIPB and 97% cumene selectivity were achieved. It was found that stability and activity of CeXN for cumene synthesis was much higher than that of CeXM zeolite. Kinetic constants for the reactions were estimated and the activation energies for various reactions over CeXM were determined. The activation enegy for transalkylation reaction was found to be 78.54 kJ/mol.