The stability of Pd dendrimer-encapsulated nanoparticles (DENS) in air-, N-2-, and H-2-saturated aqueous solutions is reported. The DENS consisted of an average of 147 atoms per sixth-generation, poly(amidoamine) dendrimer. Elemental analysis and UV-vis spectroscopy indicate that there is substantial oxidation of the Pd DENS in the air-saturated solution, less oxidation in the N-2-saturated solution, and no detectable oxidation when the DENS are in contact with H-2. Additionally, the stability improves when the DEN solutions are purified by dialysis to remove Pd2+-complexing ligands such as chloride. For the air- and N-2-saturated solutions, most of the oxidized Pd recomplexes to the interiors of the dendrimers, and a lesser percentage escapes into the surrounding solution. The propensity of Pd DENS to oxidize so easily is a likely consequence of their small size and high surface energy.