Silica-supported Pd and PdZn nanoparticles of a similar size were evaluated for neopentane hydrogenolysis/isomerization and propane hydrogenolysis/dehydrogenation. Monometallic Pd showed high neopentane hydrogenolysis selectivity. Addition of small amounts of Zn to Pd lead Pd–Zn scatters in the EXAFS spectrum and an increase in the linear bonded CO by IR. In addition, the neopentane turnover rate decreased by nearly 10 times with little change in the selectivity. Increasing amounts of Zn lead to greater Pd–Zn interactions, higher linear-to-bridging CO ratios by IR and complete loss of neopentane conversion. Pd NPs also had high selectivity for propane hydrogenolysis and thus were poorly selective for propylene. The PdZn bimetallic catalysts, however, were able to preferentially catalyze dehydrogenation, were not active for propane hydrogenolysis, and thus were highly selective for propylene formation. The decrease in hydrogenolysis selectivity was attributed to the isolation of active Pd atoms by inactive metallic Zn, demonstrating that hydrogenolysis requires a particular reactive ensemble whereas propane dehydrogenation does not.