Zirconia-palladium (ZrO2-Pd) core-shell nanoparticles were synthesized by two different methods, namely, hydrothermal and common precipitation method. A non-ionic surfactant polyvinylpyrrolidone was used as dispersant while ammonia solution as precipitator to fabricate the zirconia core particles, on which the palladium shell was subsequently forming by reducing palladium nitrate with an eco-friendly reductant-ascorbic acid. A mechanical blending method was applied to fabricate the three-way catalysts (TWCs). The physicochemical properties of ZrO2-Pd nanoparticles and catalytic performance of each catalyst were systematically studied and compared. The scanning electron microscopy, transmission electron microscopy-energy diffraction X-ray, BET, X-ray diffraction of the ZrO2 or the ZrO2-Pd nanoparticles results clarified that ZrO2-Pd core-shell nanoparticles with high dispersion and surface area were successfully prepared through hydrothermal method. A higher content of Pd was obtained in catalysts fabricated by hydrothermal method according to the inductively coupled plasma atomic emission spectrometry results. The CO pulse adsorption, H-2-temperature-programmed reduction results and catalytic tests indicated that the aged catalysts (calcined at 1000 A degrees C) possessed the higher active component dispersion, lower reduction temperature and performed the higher catalytic activity than the fresh catalysts (calcined at 550 A degrees C), especially for that with ZrO2-Pd core-shell nanoparticles synthesized through hydrothermal method. Thus, the ZrO2-Pd core-shell structure can significantly enhance the thermal stability of TWCs. [GRAPHICS] .