Reduced coenzyme II acts as both reducing and capping agents in the growth of AgPd nanoclusters within a suitable range of [K2Pd(NO2)(4)]/[AgNO3]. A remarkable acceleration occurs in the growth kinetics of AgPd nanoclusters with respect to monometallic Pd or Ag. AgPd nanoclusters display a marked electron donation from Ag to Pd, thereby contributing to the enhancement of metallic Pd-0 atoms. The AgPd nanoclusters exhibit better peroxidase mimicking activities relative to their monometallic counterparts. Addition of iodide ions significantly inhibits the peroxidase mimicking activity of Ag1Pd1 nanozyme. Hence, the Ag1Pd1-catalyzed oxidation of 3,3 ',5,5 '-tetramethylbenzidine by H2O2 is greatly suppressed. The peroxidase-like activity of Ag1Pd1 nanozyme exhibits a sensitive response to iodide ions in the range of 0.5 similar to 180 nM. AgPd nanozyme possesses a desirable selectivity toward iodide ions with respect to sulfide ions. This work would provide guidance for developing biomimetic nanomaterials in the areas of biosensing, separation, nanotechnology and green synthesis.