A novel Pd-based catalyst, small Pd nanoparticles (1-2 nm) fabricated on N,O-containing organic groups modified silica, exhibits unusual catalytic performance for selective hydrogenation of acetylene, that is, the ethylene selectivity rises significantly with the increase of acetylene conversion regardless of the variation of reaction temperature or hydrogen partial pressure until 100% acetylene conversion. The in situ DRIFTS spectra of CO adsorption show that the organic groups presented on the silica affect the electronic property of the very small Pd nanoparticles.