Palladium nanoparticles are deposited on the surface of highly magnetic carbon-coated cobalt nanoparticles. In contrast to the established synthesis of Pd nanoparticles via reduction of Pd(II) precursors, the microwave decomposition of a Pd(0) source leads to a more efficient Pd deposition, resulting in a material with considerably higher activity in the hydrogenation of alkenes. Systematic variation of the Pd loading on the carbon-coated cobalt nanoparticle surface reveals a distinct trend to higher activities with decreased loading of Pd. The activity of the catalyst is further improved by the addition of 10 vol% Et2O to iso-propanol that is found to be the solvent of choice. With respect to activity (turnover frequencies up to 11 095 h−1), handling, recyclability through magnetic decantation, and leaching of Pd (≤6 ppm/cycle), this novel magnetic hybrid material compares favorably to conventional Pd/C or Pd@CNT catalysts.