Ultrasonication method was employed for preparation of zirconia-pillared montmorillonite (Zr-PILC) by using polyhydroxy zirconium cation. The influences of various preparation parameters such as pH, concentration of pillaring agent, aging period on physico-chemical properties of Zr-PILCs are reported. The characterization was done by using different characterizing tools such as powder X-ray diffraction (XRD), thermal analysis (TG/DTA), Fourier transform infrared spectroscopy (FTIR), X-ray photo-electron spectroscopy (XPS), X-ray fluorescence spectroscopy (XRF) and surface area measurements. Effective pillaring was obtained in the pH range 2.0-2.8 at reduced preparation time by using ultrasonication. Ultrasonication, especially at higher pH and concentration of pillaring agent with no aging after ultrasonic agitation of the clay slurry was found to increase zirconium content and specific BET surface area leaving no scope for remarkable increase in d001 spacing. The presence of -OH groups attached to Zr has been revealed by pyridine-adsorbed FTIR, TG/DTA and XPS techniques. The acidic character, ease of accessibility and good dispersion of active sites in Zr-PILC were found to be controlling factors for the challenging activity in hydroxylation reaction of phenol. Probably, this first report on the use of Zr-PILC in hydroxylation of phenol and its preparation by employing ultrasonication technique may attract great attention in the catalysis area of academic and industrial importance.