A facile and aqueous-phase method based on the electron transfer reduction process for fabricating core-sheath structured polyaniline (PANI)/SnO2 composite nanorods supported Pd nanocatalyst has been demonstrated. The Pd nanoparticles synthesized by this strategy have a small size of smaller than 3.0 nm. The well dispersed Pd nanoparticles with small sizes supported on core-sheath PANI/SnO2 composite nanorods exhibited an ultrahigh catalytic activity during the catalytic reduction of p-nitrophenol into p-aminophenol by NaBH4 in aqueous solution. The kinetic apparent rate constant (k(app)) reach to be about 26.9 x 10(-3) s(-1). It is believed that this method could be extended to cover many kinds of other functional composite nanomaterials where the active component is expected to bring in new features and applications. Ultrahigh active Pd nanocatalyst supported on core-sheath conducting polymer/metal oxide composite nanorods with a small size was synthesized by an electron transfer reduction approach.