Selective hydrogenation of phenylacetylene to styrene plays a vital role in fine chemical synthesis with palladium (Pd)-based catalysts as the active components and usually suffered from low selectivity due to over-hydrogenation and low stability through polymerization (c.a. green oil generation). In this work, we found that by confining the Pd atom within a Pd-Ln (Ln: rare earth elements, such as Y, Lu, etc. ) diatomic structure [diatomic catalyst (DAC)], the reaction performance of selective hydrogenation of phenylacetylene has been greatly promoted, in which 92% styrene selectivity has been determined at 100% phenylacetylene conversion. This would be attributed to the diatomic structure established, which was achieved by introducing Pd-Ln precursors and confirmed by high-angle annular dark-field scanning transmission electron microscopy (HAADF-STEM) and X-ray adsorption fine structure (XAFS) characterizations and it was demonstrated that slight electron transfer from Ln to the adjacent isolated Pd makes it slightly negatively charged and facilitated the styrene formation. Besides, a Langmuir-Hinshelwood model was established to describe the whole reaction mechanism. After a systematic kinetic investigation, it suggests that the C8H6* + H* elementary step is probably the kinetically relevant for the whole reaction and the surface of the catalyst is mainly covered by C8H6*. The energy relationship of each step along phenylacetylene hydrogenation was quantitatively described by means of parity fitting and gas isothermal adsorption, providing insights into the selective hydrogenation of phenylacetylene over 0.02%Pd-Ln/C (Ln = Y/Lu) catalysts and pave the way of catalytic design at the atomic level.