Synthesis of chemicals derived from biomass using heterogeneous catalysts with water as a solvent elegantly fits into the realm of sustainable chemistry. In this work, a novel heterogeneous palladium copper bimetallic catalyst supported on zirconia is synthesized and fully characterized. This catalyst is used in one pot synthesis of γ-valerolactone, 1,4-pentanediol and 2-methyl tetrahydrofuran from levulinic acid and hydrogen using water as solvent. The catalyst consists of 1% palladium and 29% copper supported on zirconia and is characterized per se and after reuse by using elemental analysis, FTIR, NH3-TPD, XRD and BET surface area, XPS, SEM and TEM analysis. This is first ever report on direct synthesis of 1,4-pentanediol and 2-methyl tetrahydrofuran using water as solvent. Reaction mechanism and kinetic modeling was done to validate the experimental results. The results reported are thus a combination of synthesis of a novel catalyst with its full characterization, its application in a novel synthesis route, description of the synthesis mechanism and kinetic modelling and proof of the robustness of the developed catalyst by reusing it for four catalytic cycles.Developing strategies for synthesis of second generation biofuels is a current trend. The technologies developed ought to be inexpensive and sustainable in order that both the developing countries and developed countries could adopt them. Valorization of levulinic acid (LA) derived from renewable source; for instance, glucose and fructose, is a viable option because the products derived from it are in tune with the current liquid fuel infrastructure. 1 BioMetics Inc. developed the biorefine process to produce LA at 50-70% yields from cellulosic feedstockand estimated a large scale plant (1000-2000 ton/day) could produce LA for $ 0.09-0.11 per kg. 2 There are abundant technologies for valorization of LA to γ-valerolactone(GVL) (Table 1). 3-12 Most of these technologies employ external hydrogen as a source for hydrogenation with a suitable catalyst. Ruthenium complexes bearing monodendate phosphorous ligands are the mainly used homogeneous catalysts whereas Ru, Pd, Pt, Ni, Rh, Ir, Au supported on neutral support like silica or metal oxides have been used as heterogeneous catalysts. 13 There are very few reports on synthesis of GVL from LA using heterogeneous non noble catalysts.Cu/ZrO 2 and Cu/Al 2 O 3 made by co-precipitation have been reported for hydrogenation of LA and methyl levulinate to GVL. 9 Methanol and water were used as solvent. Cu/ZrO 2 catalyst gave 100% selectivity towards GVL. However, a copper carboxylate complex was formed which resulted in leaching of the copper catalyst when water was used as a solvent. Another route to achieve formation of GVL from LA is by transfer hydrogenation. Formic acid and LA mixture in 1:1 proportion has been used with Cu/ZrO 2 catalyst prepared by oxalate gel precipitation for selective synthesis of GVL. 14 Direct synthesis of 1,4-pentanediol (PDO) with 70% yield was achieved using Mo modified Rh/SiO 2 catal...