The structure and catalytic properties of 2 wt.-% Pd/SiO2 catalysts promoted with 2 wt.-% MgO and 0.2-5 wt.-% iron have been investigated. Catalysts were characterized by TPR, hydrogen chemisorption, and Moessbauer spectroscopy and their catalytic performance in methanol formation was also measured. At 16 at.-% iron a sharp maximum was observed in the activity which can be interpreted as being due to simultaneous promotion with iron and MgO. Independent mechanisms of promotion were found for the two modifiers: iron influenced the metallic component by forming bimetallic PdFe particles while MgO changed the properties of silica in a favorable way.