We report the compositional optimization of Pd:Zn/CeO2 catalysts prepared via sol-gel chelatization for the hydrogenation of CO2 under mild reaction conditions. The formation of a PdZn alloy, which is the main active phase for this reaction, was maximized for the catalyst with a Pd to Zn ratio close to 1. For this catalyst, a maximum conversion of 14%, close to thermodynamic equilibrium, and high selectivity to methanol (95%) were achieved at 220 °C, 20 bar, 2400 h−1 GHSV and H2:CO2 stoichiometric ratio of 3:1. The formation of PdZn alloys was achieved by reducing the catalyst precursor at 550 °C under hydrogen flow and confirmed by XRD. XPS study confirmed the presence of Pd°, being maximum for the optimized catalyst composition. At lower temperature, i.e. 180 °C, 1.0PdZn catalyst showed 100% selectivity to methanol with 8% CO2 conversion. RWGS reaction is responsible for the production of CO and its selectivity increases with temperature. In situ DRIFTS suggests that CO2 is activated as adsorbed CO3- species over CeO2. Surface micro-kinetics demonstrates that methanol can be formed either via formaldehyde or formic acid surface intermediates.