A simple and sensitive catalytic-photometric method for the determination of trace amounts of palladium(II) based on its heterogeneous catalytic effect on the reduction of neutral red (NR) by hypophosphite (HP) has been developed. The reaction was monitored at 530 nm and the time elapsed (At) for the absorbance to decrease from its initial value by 1.5 absorbance units was recorded using the variable time method. The influence of reaction variables is discussed. The ranges of linearity were 0.108–6.533 ppm and 0.032–0.653 ppm palladium(II) at temperatures of 30 and 55°C, respectively. The relative standard deviations of the developed method were 2.5 and 2.7% (for 8 replicate determinations of 1.110 ppm Pd(II)) at 30 and 55°C, respectively. The effect of interferences from other metal ions and some anions was studied. The developed method has been successfully tested for determination of Pd(II) in Al–Si–Pd catalysts.