The highly dispersed Pd nanoparticles supported UiO-66 catalysts were successfully prepared via ethylene glycol reduction method (Pd-U-EG). And their catalytic performances were evaluated by toluene degradation. A series of characterization methods were carried out to characterize the physicochemical properties of the samples. During the effect of high weight hourly space velocity, stability and reusability test, the catalytic activity of Pd-U-EG remains unchanged, which also indicated good catalytic performance. More importantly, water resistance test (10-20 vol.% water) indicated that Pd-U-EG had a great water resistance. The study of toluene-TPD, toluene-TPSR and in-situ DRIFTS at different temperatures under different conditions over Pd-U-EG indicated the role of H2O. The introduction of H2O at low temperature was conducive to the adsorption of toluene, but inhibited the degradation of toluene. Differently, the H2O presence at high temperature was favorable to toluene degradation. In addition, toluene degradation mechanism was also revealed.