The synthesis, characterization, and catalytic properties of 1-3 nm-diameter bimetallic PdAu dendrimer-encapsulated catalysts are reported. Both alloy and core/shell PdAu nanoparticles were prepared. The catalytic hydrogenation of allyl alcohol was significantly enhanced in the presence of the alloy and core/shell PdAu nanoparticles as compared to mixtures of single-metal nanoparticles.