Palladium-iron bimetallic catalysts were synthesized using carbon-coated silica supports that provided high hydrogenation activity relative to monometallic palladium under condensed-phase hydrothermal conditions. The catalysts were applied to the hydrogenation of carbonyl groups in acetone, 2-pentanone, and propionaldehyde. While Fe incorporation independent of Pd-to-Fe ratio gave enhanced activity, the catalysts having more Fe than Pd gave more than a three-fold increase in hydrogenation activity relative to the Pd only counterpart. The activity enhancement appeared to be related to the influence of Fe on the Pd as Fe under the condensed-phase reaction conditions was inert. The catalysts were also tested for hydrogenation of unsaturated carbon-carbon double bond and aromatic rings in which more moderate activity enhancement was observed. Through evaluating the influence of Pd-to-Fe ratio on catalyst properties and catalytic performance for the range of molecules, it is proposed that the turnover frequency enhancement can be attributed to the formation of Pdδ− via Pd-Fe interaction.