Direct alcohol fuel cells are the next‐generation energy sources of the future due to their high power density. Palladium electrocatalysts are promising prospects for enhancing alcohol oxidation in alkaline media, but the higher cost and susceptibility to CO poisoning limit their application and commercialization. Thus, there is a need to improve the performance of the Pd electrocatalysts by utilizing a double supporting system. A microwave‐assisted polyol method is used to synthesize the palladium nanoparticles supported on iron oxide‐carbon black material (Pd/Fe2O3‐CB). Physiochemical and electrochemical characterization of the obtained electrocatalysts materials is conducted to study morphology and the electrochemical behaviour of the as‐synthesized electrocatalysts. The Pd/Fe2O3‐CB displayed higher kinetics approved by a higher current density of 58.7 mA cm−2, stability, and durability, owing to Fe2O3, and CB incorporation. Density functional theory (DFT) proves that C from CO has more robust interactions with surface Pd, thereby explaining the stronger C‐O binding property of Pd. The orbital analysis revealed that 3d orbitals of Pd participate in the hybridization with 2p orbitals of C and O. As a result, the overlap between C2p and Pd3d/Fe3d orbitals significantly broadened, leading to solid adsorption of CO over Pd/Fe2O3.