2-Methyl-3'-hydroxydiphenylamine was synthesized from the mixture of 3-aminophenol, 3-nitrophenol, and 2-methylcyclohexanone in the presence of Pd/C catalyst. The optimum composition of the reaction mixture was determined for maximum yield of the diphenylamine derivative : with the molar ratio of 3-aminophenol : 3-nitrophenol fixed at 1 mmol : 2 mmol, the relative molar amounts of 2-methylcyclohexanone were varied between 3 and 96. At the optimum composition the amounts of Pd/C catalyst were varied threefold in order to investigate the effect of Pd on the product yield. The results obtained from the reaction mixture containing 1 mmol of 3-aminophenol were satisfactorily reproduced for the reaction mixture containing more than 10 mmol of 3-aminophenol. The formation of this diphenylamine derivative could be interpreted using the mechanism for the catalytic synthesis of 2-methyl-4-methoxydiphenylamine which we had optimized previously.