The　low　performance　of　palladium　(Pd)　is　a　considerable　challenge　for　direct　formic　acid　fuel　cells　in　practical　applications.　Herein,　we　develop　a　simple　strategy　to　synthesize　a　highly　active　and　durable　Pd　nanocatalyst　encapsulated　in　ultrathin　silica　layers　with　vertically　aligned　nanochannels　covered　graphene　oxides　(Pd/rGO@pSiO(2))　without　blocking　active　sites　by　selective　deposition.　The　Pd/rGO@pSiO(2)　catalyst　exhibits　very　high　performance　for　a　formic　acid　oxidation　(FAO)　reaction　compared　with　the　Pd/rGO　without　protective　silica　layers　and　commercial　Pd/C　catalysts.　Pd/rGO@pSiO(2)　shows　an　FAO　activity　3.9　and　3.8　times　better　than　those　of　Pd/rGO　and　Pd/C　catalysts,　respectively.　The　Pd/rGO@pSiO(2)　catalysts　are　also　almost　6-fold　more　stable　than　Pd/C　and　more　than　3-fold　more　than　Pd/rGO.　The　outstanding　performance　of　our　encapsulated　Pd　catalysts　can　be　ascribed　to　the　novel　design　of　nanostructures　by　selective　deposition　fabricating　ultrasmall　Pd　nanoparticles　encapsulated　in　ultrathin　silica　layers　with　vertically　aligned　nanochannels,　which　not　only　avoid　blocking　the　active　sites　but　also　facilitate　the　mass　transfer　in　encapsulated　catalysts.　Our　work　indicates　an　important　method　to　the　rational　design　of　high-performance　catalysts　for　fuel　cells　in　practical　applications.