Metallic Pd nanoparticles with narrow size distributions were prepared in cross-linked ionic liquid polymers (microgels). The microgels support Pd nanoparticles and prevent their aggregation. Size control of the Pd nanoparticles in polymers is possible by varying the metal loading and reduction method. The particle size has a clear effect on the hydrogenation activity of the Pd nanoparticles with 3 nm sized ones being most active in styrene hydrogenation. Also the physicochemical properties of the polymeric microgels significantly influence catalytic performance. High activity is obtained when bromide is used as the counterion because of the good swellability of the resulting Pd/microgel catalysts in polar solvents such as methanol. The use of a hydrophobic counterion results in loss of catalytic activity. Furthermore, the microgels supported Pd nanoparticles can be recycled at least ten times without obvious loss of activity.