The catalytic activity of cefia-supported Pd for selective hydrogenation of CO is well preserved in the presence of 30 ppm H2S due to the parallel oxidation of sulfur by CeO2 under standard methanol synthesis conditions. The bifunctional nature of this catalyst opens a route for the conversion of sulfur-contaminated gas streams such as the integrated gasification combined cycle syngas or biogas into liquid fuels if desulfurization by conventional means is not practical.