Disclosed is a catalyst for methanation reaction producing methane with high conversion by reaction of hydrogen with carbon dioxide, or a gas mixture of carbon dioxide and carbon monoxide, or a gas mixture containing these compounds as the main components. The catalyst is prepared by the steps of mixing (A) aqueous zirconia sol with salts of (B) stabilizing element(s), which is selected from the group consisting of Y, La, Ce, Pr, Nd, Sm, Gd, Dy, Ca and Mg, and (C) iron group element(s), drying and calcining the mixture to obtain a catalyst precursor, and subsequent reduction of the precursor. The catalyst comprises, by atomic %, A: 18-70%, B: 1-20% and C: 25-80% based on the elemental states of the metals. The catalyst is characterized by multiple oxide of tetragonal zirconia structure, in which not only the stabilizing element(s) but also a part of the iron group element(s) is incorporated, and on which the iron group element(s) in the metallic state is supported.