Brij-35 [polyoxyethylene(23) lauryl ether] stabilised palladium nanoparticles, obtained on attempted sono-chemical reduction of PdCl2, by sodium sulfite in water under Argon, instantaneously oxidized to PdO. The particles obtained were stable and have narrow size distribution with an average size of 10 nm diameter. PdO nanoparticles were reduced to Pd nanoparticles in an autoclave by treatment with 50 bar hydrogen at 140degreesC. The catalytic behaviour of Pd nanoparticles, thus obtained, is unusual in comparison with conventional Pd catalysts. The nanoparticles were characterized by UV-Vis spectroscopy, TEM and their X-ray Absorption Near Edge Structure (XANES) at the Pd-L-III edge.