The compound EuPd2Si2 is a well-known fluctuating-valent compound with a largest variation of Eu valence in a narrow temperature interval (around 150 K).The ball-milled form of this compound was investigated to understand the Eu valence behavior in the nanoform. The compound is found to retain the ThCr2Si2-type tetragonal structure after ball-milling leading to a reduction in particle size, typically falling in the range 10 -100 nm. We find that there is a qualitative change in the temperature dependence of magnetic susceptibility for such small particles, with respect to that known for bulk form. To understand this microscopically, Mössbauer spectra as a function of temperature were taken. The Mössbauer spectrum of the nanocrystalline compound is essentially divalent-like at room temperature, but becomes distinctly bimodal at all temperatures below 300 K, unlike that of the bulk form. That is, there is a progressive transfer of intensity from divalent position to trivalent position with a gradual decrease of temperature. We attribute it to a first-order valence transition, with extreme broadening by defects in the nano specimen. Thus there is a qualitative change in the valence behavior in this compound as the particle size is reduced by ball-milling. Such a particle size study is reported for the first time for a Eu-based mixed valent compound.