Pd nanoparticle size sensitivity of 4,6‐dimethyldibenzothiophene (4,6‐DMDBT) hydrodesulfurization was investigated by using 4, 8, 13, and 87 nm particles and was compared with the sulfur‐free and sulfur‐inhibited hydrogenation of 3,3‐dimethylbiphenyl, which is a product of direct desulfurization of 4,6‐DMDBT. The smallest 4 nm particles provided unprecedented (for Pd at 5 MPa and 300 °C) direct desulfurization selectivity of 20 % at 40 % conversion because of the reduced contribution of the hydrogenation path. The 4 nm particles were poisoned by the adsorbed sulfur to the greatest extent. The optimal size, providing the highest Pd mass‐based yield of the desulfurized products, was found to be 8 nm. The catalyst with 87 nm particles was based on Pd nanocubes with the lowest edge/terrace surface atom ratio and large terraces and this showed the lowest sulfur extraction from both 4,6‐DMDBT and sulfurous intermediates as a result of the low availability of edge atoms for a perpendicular sigma‐mode adsorption through the lone pair of the sulfur atom.