Heterogeneous catalysts based on Pd play a vital role in enabling efficient formic acid decomposition (FAD). Nevertheless, the performance of Pd-based catalysts is constrained by inherent challenges, such as Pd particles’ tendency to aggregate and possess localized electronic structures. Therefore, there is an urgent need to develop an effective strategy to simultaneously overcome these challenges. In response to this, we synthesized knitting hypercrosslinked polymers (HCPs) using m-phenylenediamine (MPD) as the aromatic monomer. A dual-optimization approach was proposed, aiming to mitigate the adverse effects of excessive coordination and maximize the involvement of residual Fe3+ in the bimetallic synergistic effect. Experimental findings, DFT calculations, and ab initio molecular dynamics simulations (AIMDs) collectively suggest that reducing the coordination effect leads to enhanced nitrogen exposure in the HCPs, consequently reducing the size of Pd species. Furthermore, the incorporation of residual Fe3+ into Pd forms Pd-Fe bimetallic species, which then adjusts the catalytic reaction barrier and enhances catalytic activity. Notably, the optimized Pd@MHCP-2 catalyst exhibited exceptional performance in the FAD reaction at 323 K, achieving a remarkable turnover frequency (TOF) value of 1486 h−1. This research introduces a novel perspective for the design and development of next-generation Pd-based catalysts.