A series of palladium nanoparticles (Pd NPs) intercalated montmorillonite clay catalysts is reported for hydrogenation of 3-diphenyl prop-2-en-1-imine under mild reaction conditions. Pd/clay catalyst was prepared by a simple wet-impregnation method, and the physicochemical properties were characterized extensively by various techniques including N-2 adsorption, XRD, TEM, XPS and TPR etc., which showed the intercalation of active Pd NPs between the clay layers. The effect of reaction conditions such as catalyst loading, reaction time, temperature and H-2 pressure is explored, and thereby a plausible mechanism is proposed. The optimum amount of 6 wt \% Pd/clay catalyst showed significant catalytic activity to yield 3-phenyl propyl aniline with 100 \% conversion and selectivity under 5 bar pressure and a shorter reaction period of 3.5 h at 100 degrees C. The developed catalytic system unveiled excellent reusability over five cycles and hence paved the way for industrial applications.