The direct formic acid fuel cell (DFAFC) has two major shortcomings that limit its lifespan and performance: (i) the poor electrocatalytic stability of the carbon supported Pd (Pd/C) catalyst for the oxidation of formic acid and (ii) rapid decomposition of formic acid over the Pd/C catalyst. To solve the problems, the Pd/C catalyst is modified with ethylenediamine-tetramethylene phosphonic acid (EDTMP). The resulting catalyst is designated as Pd/C-E catalyst. It is found that the Pd/C-E catalyst can inhibit the decomposition of formic acid and promote the oxidation of formic acid through the direct pathway. Consistently, the Pd/C-E catalyst is significantly protected from CO poisoning. As compared to the Pd/C catalyst, the electrocatalytic performance of the Pd/C-E catalyst is significantly superior. These results provide the first proof of the concept that DFAFC can be significantly improved by Pd/C-E catalyst.