In this work, palladium nanoparticles were deposited on oxygen and phosphorous functionalised carbon nanofibers (CNFs) by sol immobilisation method in order to investigate the support-metal effect on the formic acid (FA) decomposition reaction. In order to establish the presence of functional groups in the support and their effect on Pd nanoparticles, the obtained samples were then, characterised by Transmission Electron Microscopy (HR-TEM, STEM-HAADF and STEM-EDS) and X-ray photoelectron spectroscopy (XPS). FA catalytic decomposition performance, the stability and selectivity of the catalysts were evaluated in liquid-phase at mild reaction conditions. The effect of the metal-support interaction in the reactivity and stability of the catalysts was demonstrated leading to superior catalytic properties in both the functionalised materials. Density functional theory (DFT) simulations provided further insights in the interaction of Pd-15 cluster with different support surfaces, i.e. pristine graphene (PG), carboxyl doped graphene (G_COOH), hydroxyl doped graphene (G_OH), carbonyl doped graphene (G_CO) and phosphate doped graphene (G_PO3H). The cluster-support interaction strength follows the trend Pd/G_CO > Pd/G_COOH > Pd/G_OH > Pd/G_PO3H > Pd/PG, confirming the increased stability of 1 wt% Pd@O-HHT and 1 wt% Pd@P-HHT observed in the experimental results.