Formic acid (HCOOH) has great potential as an in situ source of hydrogen for fuel cells, because it offers high energy density, is non-toxic and can be safely handled in aqueous solution. So far, there has been a lack of solid catalysts that are sufficiently active and/or selective for hydrogen production from formic acid at room temperature. Here, we report that Ag nanoparticles coated with a thin layer of Pd atoms can significantly enhance the production of H2 from formic acid at ambient temperature. Atom probe tomography confirmed that the nanoparticles have a core–shell configuration, with the shell containing between 1 and 10 layers of Pd atoms. The Pd shell contains terrace sites and is electronically promoted by the Ag core, leading to significantly enhanced catalytic properties. Our nanocatalysts could be used in the development of micro polymer electrolyte membrane fuel cells for portable devices and could also be applied in the promotion of other catalytic reactions under mild conditions.