Four Pd-Cu-based (2:1 wt.%) catalysts for water denitration, differing in physico-chemical characteristics and structural quality, were prepared, using carbon nanotubes (CNTs) as supports. The extent of lattice defects in the pristine CNTs turned out to govern resulting varieties of Pd nanoparticle size and the composition of the bimetallic (Pd:Cu) entities in the catalysts, playing an important role in nitrate reduction. Catalyst samples characterized by close proximity of Pd and Cu, as in an alloy, displayed the highest degree of nitrate conversion. At the same time, the size of the Pd particles, alone, or decorated to different extents with Cu atoms, was found to be critical for the second step of denitration reaction, directing the formed nitrite to either N-2 or NH3. Water denitration is a structure sensitive reaction related to Pd particle size, and this effect is further emphasized in the decoration of the particle by the incorporation of Cu atoms into Pd particle corners and edges.