Catalytic hydrodechlorination with Pd as a catalyst is an efficient way to destroy chlorinated hydrocarbons in aqueous systems. Herein, we present a straightforward and environmentally friendly aqueous phase synthesis of small and nearly monodisperse Pd nanoparticles (mean size: 2.4 nm, standard deviation, SD: 0.5 nm) by employing a “green”, inexpensive, and biodegradable/biocompatible polysugar, sodium carboxymethyl cellulose (CMC), as a capping agent. The Pd nanoparticles exhibited rather high catalytic activity (observed pseudo-first-order reaction kinetic rate constant, k_obs = 728 ) for the hydrodechlorination of environmentally deleterious trichloroethene (TCE) in water. Fourier transform IR (FT-IR) spectra indicate that CMC molecules interact with the Pd nanoparticles via both carboxyl (COO-) and hydroxyl (-OH) groups, thereby functioning to passivate the surface and suppress the growth of the Pd nanoparticles. In comparison with â-D glucose, another “green” capping agent that exhibits an ability to stabilize the particles by only through –OH groups, CMC gives rise to smaller Pd nanoparticles in aqueous solution with a narrower size distribution due to the additional interactions exerted from the COO- groups with Pd nanoparticles and the stronger electrostatic repulsion between CMC molecules residing on the adjacent Pd nanoparticles. The CMC capped Pd nanoparticles exhibited signficantly higher catalytic activity per unit surface area (or per surface atom) of the particles (k_SA = 3.50 ,TOF = 54.2 min^-1) for hydrodechlorination of TCE compared to the β-D glucose capped Pd nanoparticles (k_SA = 1.31 , TOF = 18.2 min^-1). The molecular structure of CMC enables this polysugar to encapsulate the surface of Pd nanoparticles in a less compact fashion compared to the small molecule β-D glucose. As s result, the active sites on the surface of CMC-capped Pd nanoparticles are more readily accessible for the catalytic hydrodechlorination of TCE.This work provides an insight into the influence of the capping ligand chemistry on metal nanoparticle catalysis.