Palladium substituted and palladium impregnated nanocrystalline anatase titania were prepared by solution combustion method. These catalysts were characterized by XRD, XPS, FT-IR, TGA, BET, UV-vis absorption, TEM and photoluminescence (PL) measurements. The catalysts have been used for the first time for liquid phase photocatalysis. The photocatalytic degradation of various dyes such as Alizarin Red S, Methylene Blue, Orange G and Rhodamine B and phenol and 4-chlorophenol was investigated under UV exposure. Though Pd-ion substituted titania has significantly higher photocatalytic activity compared to unsubstituted titania for NO reduction and NO decomposition, the initial rate of degradation for all the dyes, phenol and 4-chlorophenol was lesser in Pd substituted and impregnated titania compared to that of unsubstituted titania. This reduced reaction rate was attributed to a decrease in the surface area and PL intensity. This study shows that the photoluminescence is the key factor in determining the photocatalytic activity in liquid phase reactions. © 2008 Elsevier B.V. All rights reserved.