Palladium-impregnated zirconia (LSCM/YSZ) composite anode is investigated in detail for the direct utilization of methane in solid oxide fuel cells (SOFCs). Impregnation of Pd nanoparticles significantly promotes the electrocatalytic activity of LSCM/YSZ composite anodes for the methane electro-oxidation reaction in wet . At , the electrode polarization resistance for the methane oxidation is reduced by a factor of 3 after impregnation of 0.10–0.66 mg Pd. Pd impregnation primarily enhances the electrode processes at low frequencies, indicating the significant promotion effect on the oxygen transfer process and the decomposition for the reaction on the LSCM/YSZ composite anodes. No carbon deposition was observed for the reaction in wet on Pd-impregnated LSCM/YSZ composite anodes. In contrast, Pd impregnation has little effect on the hydrogen oxidation in wet . The results demonstrate that the Pd-impregnated LSCM/YSZ composite is a promising carbon-tolerant anode for natural gas fuel-based SOFCs.