The preparation of organic-inorganic hybrid microgels with functional Fe3O4 nanoparticles as the crosslinker and 2-vinyl pyridine (2VP) as the pH-sensitive monomer is reported. Magnetic Fe3O4 nanoparticles were first synthesized via a redox reaction and then modified with 3-(trimethoxysilyl)propylmethacrylate (TMSPMA) via the silanization. The bonding of multiple TMSPMA monomers on the surface of Fe3O4 nanoparticles renders them as crosslinker. Radical polymerization of 2VP was then carried out with the presence of TMSPMA-modified Fe3O4 nanoparticles, leading to the formation of P2VP-Fe3O4 hybrid microgels crosslinked with Fe3O4 nanoparticles. The synthesized hybrid microgels are able to trap metal ions such as Pd2+ via complex formation of P2VP with metal ions. The reduction of trapped palladium ions by sodium borohydride led to immobilized-palladium nanoparticles. The synthesized PdNPs@P2VP-Fe3O4 is employed as a new nanocatalyst toward oxidation reaction of alcohols. In addition, the catalytic activity of metal nanocomposite has been found that can be modulated by the volume transition of microgel structures by pH change for the oxidation reaction of benzyl alcohol. Transmission electron microscopy, thermogravimetric analysis, vibrating sample magnetometer, scanning electron microscopy, X-ray powder diffraction, Atomic absorption and Fourier transform Infrared were then used to characterize the resultant catalyst.