Highly dispersed and ultrafine palladium–phosphorus (Pd–P) nanoparticles (NPs) are prepared with a novel phosphorus reduction method. The structural and electronic properties of Pd–P NPs are characterized using Fourier transform infrared (FT-IR), energy dispersive spectrometer (EDS), X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS) and transmission electron microscopy (TEM). The electrooxidation of formic acid on Pd–P NPs are investigated by using cyclic voltammetry, chronoamperometry and CO-stripping measurements. The physical characterizations indicate the doped P element can enhance the content of Pd0 species in Pd NPs, decrease the particle size and improve the dispersion of Pd–P NPs. The electrochemical measurements show the Pd–P NPs have a better catalytic performance for formic acid electrooxidation than Pd NPs.