The development of a facile, instep, and eco-friendly synthesis method of mono-dispersed low quantity palladium nanoparticle/carbon@functionllized carbon nanotube composite (Pd@C-f-CNT)electrocatalytic material was developed for use in the electrooxidation of xylitol. The prepared nanocatalyst was analyzed by powder X-ray diffraction analysis, Raman spectroscopy, X-ray photoelectron spectroscopy, and scanning and transmission electron microscopy. The electrocatalytic studies were performed using voltammetric methods. Formation of Pd NPs was observed within 2 min. The microscopic analysis showed 5- to 10-nm-sized Pd NPs that uniformly covered the CNT. The instep-formed carbon helped to improve the electrocatalytic activity of the catalyst. Our proposed method provides new insight for the development of highly efficient metal NPs/CNT nanocatalyst for direct alcohol fuel cell applications.