Palladium (Pd)-catalyzed selective hydrogenation of alkynes has been one of the most studied hydrogenation reactions in the last century. However, kinetic studies conducted to reveal the catalyst's active centers have been hindered because of dynamic surface changes on Pd during the reaction. In the present study, bimetallic Pd-Au nanoparticles supported on carbon nanotubes have been synthesized at room temperature as catalysts for selective hydrogenation of phenylacetylene, which show effectively enhanced selectivity compared to their monometallic counterparts. Structural and surface analyses of fresh and reacted catalysts reveal that selective hydrogenation of phenylacetylene is favored over nanosized Pd-Au bimetallic phases due to modifications in the Pd surface in terms of neighboring site isolation and electron density reduction.