Biologically mediated nanoparticle (NP) synthesis offers a reliable and sustainable alternative route for metal NP production. Compared with conventional chemical and physical production methods that require hazardous materials and considerable energy expenditure, some microorganisms can reduce metal ions into NPs during standard metabolic processes. However, to be considered a feasible commercial option, the properties and inherent activity of bio-NPs still need to be significantly improved.In this work, we present an Escherichia coli-mediated synthesis method for catalytically active Pd−Fe NPs. The produced biogenic Pd−Fe NPs with varying Fe content were characterized using complementary analytical techniques to assess their size, composition, and structural properties. In addition, their catalytic performance was assessed by using standardized chemical reactions. We demonstrate that the combination of Pd with Fe leads to synergistic effects that enhance the catalytic performance of Pd NPs and make biogenic Pd−Fe NPs excellent potential substitutes for currently used catalysts. Briefly, the apparent rates for the model reaction of 4-nitrophenol reduction to 4-aminophenol catalyzed by Pd-based nanoparticles were as high as 0.1312 min −1 using bimetallic Pd−Fe NPs, which is far superior to the rates of monometallic Pd NPs counterparts. This study provides a feasible strategy for the synthesis of multimetallic Pd-based NPs using common microbial processes. It emphasizes the potential of biogenic Pd−Fe NPs as efficient and sustainable catalysts for hydrogenation reactions, offering an environmentally friendly synthesis for various applications, including wastewater treatment and the production of fine chemicals.