The Dirac semimetal PdTe2 was recently reported to be a type-I superconductor with Tc = 1.64 K and a critical field µ0Hc = 13.6 mT. Since type-I superconductivity is unexpected for binary compounds, we have conducted muon spin rotation experiments to probe the superconducting phase on the microscopic scale via its intermediate state. For crystals with a finite demagnetization factor, N , the intermediate state forms in applied fields (1 − N )Hc < Ha < Hc. We have carried out transverse field muon spin rotation measurements on a thin disk-like crystal with the field perpendicular to (N ⊥ = 0.86) and in the plane (N = 0.08) of the disk. By analysing the µSR signal we find that the volume fraction of the normal domains grows quasi-linearly with applied field at the expense of the Meissner domain fraction. This then provides solid evidence for the intermediate state and type-I superconductivity in the bulk of PdTe2.