Subnanometric Pd clusters confined within zeolite crystals was fabricated using zeolitic seeds with premade [Pd3Cl(PPh2)2(PPh3)3]+ clusters under hydrothermal conditions. Characterization of the Pd3@Beta catalysts indicate that the Pd clusters confined in the channels of Beta zeolite exhibit better dispersion and stronger interaction with the zeolite support, leading to stabilized Pd species after heat treatment by high temperature. In the model reaction of toluene combustion, the Pd3@Beta outperforms both zeolite-supported Pd nanoparticles prepared by conventional impregnation of Pd3/Beta and Pd/Beta. Temperatures for achieving toluene conversion of 5%, 50% and 98% of Pd3@Beta are 136, 169 and 187 °C at SV = 60 000 mL g−1 h−1, respectively. Pd3@Beta could also maintain the catalytic reaction for more than 100 h at 230 °C without losing its activity, an important issue for practical applications. The metal-containing zeolitic seed directed synthesis of metal clusters inside zeolites endows the catalysts with excellent catalytic activity and high metal stability, thus providing potential avenues for the development of metal-encapsulated catalysts for VOCs removal.