Biomass gasification has yet to obtain industrial acceptance. The high residual tar concentrations in syngas prevent any ambitious utilization. In this paper a novel gas purification technology based on catalytic hydrocracking is introduced, whereby most of the tarry components can be converted and removed. Pilot scale experiments were carried out with an updraft gasifier. The hydrocracking catalyst was palladium (Pd). The results show the dominant role of temperature and flow rate. At a constant flow rate of 20 Nm3/h and temperatures of 500 °C, 600 °C and 700 °C the tar conversion rates reached 44.9%, 78.1% and 92.3%, respectively. These results could be increased up to 98.6% and 99.3% by using an operating temperature of 700 °C and lower flow rates of 15 Nm3/h and 10 Nm3/h. The syngas quality after the purification process at 700 °C/10 Nm3/h is acceptable for inner combustion (IC) gas engine utilization.