Using time-resolved photoelectron spectroscopy we show that electron relaxation processes via inelastic electron-electron scattering are efficient energy dissipation channels not only in bulk metals but also in extremely small transition metal clusters. The photoelectron spectra of optically excited Pd-3(-), Pd-4(-), and Pd-7(-) reveal effective electron relaxation times of less than 100 fs. Moreover the relaxation times vary with cluster size. In comparison to simple metal clusters the bulklike inelastic scattering rates in open d-shell transition metal clusters are attributed to the larger valence electron level density. An energy transfer to the vibrational degrees of freedom occurs within 10 ps.