1,3-Diphenylurea (DPU) has been proposed as a synthetic intermediate for phosgene-free synthesis of methyl N-phenylcarbamate and phenyl isocyanate, which are easily obtained from the urea by reaction with methanol. Such an alternative route to synthesis of carbamates and isocyanates necessitates an improved phosgene-free synthesis of the corresponding urea. In this work, it is reported that Pd(II)-diphosphine catalyzed reductive carbonylation of nitrobenzene in acetic acid (AcOH)-methanol proceeds in high yield and selectivity as a one-step synthesis of DPU. We have found that the catalytic activity and selectivity of this process depends on solvent composition and on the bite angle of the diphosphine ligands. Under optimum reaction conditions, yields in excess of 90 molar % and near-quantitative selectivity can be achieved.