The key challenge for 5‐hydroxymethylfurfural oxidation reaction (HMFOR) lies in understanding the synergistic interactions between active sites and adsorption sites, but the uncertain spatial positions of these two sites largely limit their synergistic effect. Here, an embedded Pd/NiFe layered double hydroxide (LDH) with Pd nanoparticles (NPs) (3.6 nm) far larger than the interlayer spacing of LDH is reported, which results in the in situ generation of the defective structures at the interface of the NiFe laminate. The Pd/NiFe shows a lower onset potential of 1.34 V compared to NiFe (1.42 V). Experimental and theoretical calculations reveal that the Pd NPs exhibit a high level of orbital overlap with HMF, leading to a strong adsorption tendency and an increased local concentration of HMF near the Pd NPs. The Ni defects generated around Pd NPs result in the 3d‐orbitals of adjacent Ni sites approaching the Fermi level, reducing the oxidation barrier from Ni2+‐OH to Ni3+‐O active sites. Furthermore, this work provides crucial evidence for the hydration interactions between the aldehyde groups in HMF and the hydroxyl groups on the catalyst surface, demonstrating that the removal ability of the latter one can have an important influence on HMFOR activity.