Magnetic and hydroxylated carbon nanotubes (NiCNTs-OH) were synthesized in situ via a green, facile, and efficient water-assisted chemical vapor deposition (H2O-CVD) method. Pd nanoparticles (NPs) were then anchored to the surfaces of the NiCNTs-OH and the resulting Pd/NiCNTs-OH were studied for their catalytic efficiency in the Heck reaction. Transmission electron microscopy images show that the prepared Pd/NiCNTs-OH consist of a CNT-based framework with Pd NPs of 2–4 nm and Ni NPs encapsulated by the tubes. Vibrating sample magnetometer measurements reveal that the catalysts are easily recycled by magnetic separation. Raman spectroscopy, X-ray photoelectron spectroscopy, and density functional theory calculations suggest that defects and oxygen-containing groups are introduced by the H2O-CVD method, providing sufficient anchoring sites for Pd NP loading. Hence, the Pd/NiCNTs-OH exhibit excellent yields in the Heck reaction of various aryl iodides with methyl acrylate. This work thus demonstrates a green and facile method for the preparation of magnetic nano-catalysts that can be employed for various catalytic reactions.