For carbon supported Pd catalysts, the surface properties of activated carbons (ACs) are closely related with the Pd particle size. In this study, phenolic groups were adjustably introduced on ACs by hydrothermally treating ACs under different temperatures (433-513 K). Pd/ACs catalysts were prepared by the wetness impregnation method and characterized by X-ray diffraction (XRD), transmission electron microscopy (TEM), CO chemisorption, and H-2-temperature-programmed reduction (TPR). The results revealed that the size of Pd nanoparticles (NPs) was highly dependent upon the amount of phenolic groups. The density functional theory (DFT) study suggested that the enhanced binding between palladium clusters and surface functional groups (SFGs) modified carbon nanotubes (CNTs) in the sequence: CNTs-O > CNTs-OH > CNTs-COOH > CNTs. Both the experimental and theoretical results suggested that phenolic groups on the surface of ACs play a vital role in the stabilization of Pd NPs, which provides insight into how to treat/or choose carbon supports for the preparation of small noble metal particles.