Pd-polyaniline nanocomposites are found to be highly selective sensors for the methanol vapours. The response is found to be rapid and reversible. However, the mode of synthesis is observed to affect the magnitude of response as well as response time. The nanocomposites were synthesized by a two step method involving the formation of Pd nanoparticles followed by the polymerization of nanosol to obtain the nanocomposite. Pd nanoparticles were prepared by two different methods namely thermal reduction (reflux) and g radiolysis. The selectivity of the nanocomposites was investigated by exposing them to mixtures of methanol-ethanol and methanol – isopropanol. The two composites were found to exhibit exactly identical response as that for pure methanol except that the response time is much longer. The mechanism of sensing has been explained on the basis of FT-IR spectroscopy. Key words: Palladium-polyaniline nanocomposites, thermal reduction, r-radiolysis