Nanometer-sized metallic palladium particles can be synthesized by hydrogen reduction of Pd2+ ions dissolved in the water core of a water-in-CO2 microemulsion. The Pd nanoparticles, stabilized by the micromeulsion and uniformly dispersed in the supercritical fluid phase, are effective catalysts for hydrogenation of olefins. Examples of rapid and efficient hydrogenation of water-soluble and CO2-soluble olefins catalyzed by the Pd nanoparticles in supercritical CO2 are given.