Tuning the surface chemical property and the local environment of nanocrystals is crucial for realizing a high catalytic performance in various reactions. Herein, we aim to elucidate the structure sensitivity of Pd facets on the surface catalytic hydrogenation reaction and to identify what role the nanoconfinement effect plays in the catalytic properties of Pd nanocrystal catalysts. By controlling the coating structures of mesoporous silica (mSiO 2 ) on Pd nanocrystals with different exposed facets that include {100}, {111}, and {hk0}, we present a series of Pd@mSiO 2 nanoreactors in core−shell and yolk−shell structures and the discovery of a partial-coated structure, which can provide different types of nanoconfinement, and we propose a seed size-dominated growth mechanism. We demonstrate that a superior activity was exhibited in Pd nanocrystals enclosed by the {hk0} facet as compared to the Pd{100} and Pd{111} facets, and substantially enhanced efficiency and stability were achieved in Pd@mSiO 2 particles with yolk−shell structures, indicating a crucial superiority of optimizing the configuration of crystal facets and nanoconfinement. Our study provides an efficient strategy to rationally design and optimize nanocatalysts for promoting catalytic performance.