Hydrocinnamaldehyde (HCAL) is a crucial intermediate in the manufacture of perfumes and pharmaceuticals, but highly selective hydrogenation of cinnamaldehyde (CALD) to hydrocinnamaldehyde with a good conversion rate is a challenging. We report that the incorporation of Ag into Pd-based catalysts promotes their catalytic activity and HCAL selectivity (HCAL selectivity of 98.6% with > 99.9% CALD conversion for Pd-0.3Ag/MCM-41) for CALD hydrogenation compared to those of catalysts with no Ag, e.g., HCAL selectivity of 84.5% for Pd/MCM-41 and 77.3% for Pd/AC (activated carbon). The Pd-0.3Ag/MCM-41 catalyst shows an outstanding stability during five cycles of use. The excellent performance of the Pd-0.3Ag/MCM-41 catalyst in CALD hydrogenation is due to the ultra-small size of the Pd nanoparticles (Pd-Ag alloy, a geometric and electronic modification of Pd).