Due to the high costs, slow reaction kinetics, and methanol poisoning of platinum-based cathode catalysts, designing and exploring non-Pt or low-Pt cathode electrocatalysts with a low cost, high catalytic performance, and high methanol-tolerance are crucial for the commercialization of fuel cells. Here, a facile method to fabricate a system of PdAg nanorings supported by graphene nanosheets is demonstrated; the fabrication is based on the galvanic displacement reaction between pre-synthesized Ag nanoparticles and palladium ions. X-ray diffraction and high-resolution transmission electron microscopy show that the synthesized PdAg nanocrystals exhibit a ring-shaped hollow structure with an average size of 27.49 nm and a wall thickness of 5.5 nm. Compared to the commercial Pd–C catalyst, the PdAg nanorings exhibit superior properties as a cathode electrocatalyst for oxygen reduction. Based on structural and electrochemical studies, these advantageous properties include efficient usage of noble metals and a high surface area because of the effective utilization of both the exterior and interior surfaces, high electrocatalytic performance for oxygen reduction from the synergistic effect of the alloyed PdAg crystalline phase, and most importantly, excellent tolerance of methanol crossover at high concentrations. It is anticipated that this synthesis of graphene-based PdAg nanorings will open up a new avenue for designing advanced electrocatalysts that are low in cost and that exhibit high catalytic performance for alkaline fuel cells.