This work describes the preparation of Pd nanoparticles in multilayer polyelectrolyte films fabricated on a magnetic ferrite core by a layer-by-layer (LbL) self-assembly technique, and the relationship between catalytic activity and these hybrid core-shell nanocomposite structures in the hydrogenation of olefinic alcohols. The hydrogenation reaction seems to be only catalyzed by Pd nanoparticles in the outermost layer of the hybrid composites, probably due to the restricted diffusion of olefinic alcohols into ionically cross-linked multilayer films. The nano-size Pd catalysts attached to the core magnetic nanoparticles (MNP, CoFe2O4; average size = 20 nm) could be easily and efficiently isolated from the final product solution by magnetic decantation (applying external magnetic field), and be reused for 10 consecutive reactions without showing any significant activity degradation. (c) 2006 Elsevier B.V. All rights reserved.