The design of catalyst surfaces that exhibit high activities for ethanol oxidation reaction (EOR) is essential to achieving practical application of direct ethanol fuel cells. Composite catalysts of Pd nanoparticles and metal hydroxide are promising candidates for EOR; however, a guide of catalyst design, including appropriate valence states and interfacial structures between component materials, has not been identified. Herein, we synthesize composite electrocatalysts of cubic and octahedral Pd nanocrystals with well-defined facets and monolayer metal hydroxide nanosheets with an identical structure and different composition containing Ni, Fe and Mn, and systematically elucidate highly active interfacial sites between Pd and metal hydroxides for EOR. Promotion of OH− adsorption by the hydroxide nanosheets enhances the catalytic activities of the Pd nanocrystals and the nanosheet having higher affinity to OH− result in higher EOR performances of the composite catalysts. The improved activities are greater for (111) facet than for (100) facet of the Pd whereas the (100) facet is superior for EOR to the (111) facet for the bare Pd nanocrystals. Our study suggests that combination of the Pd (111) facet and metal hydroxides is favorable for developing highly active electrocatalysts for EOR.