A Pd-Fe/graphene multifunctional catalytic cathode was prepared to build a diaphragm electrolysis system with a Ti/IrO2/RuO2 anode and an organicterylene filter cloth. The degradation of organic wastewater containing 4-chlorophenol by combination of cathodic hydrogenation dechlorination and oxidation of anode and cathode was investigated. The degradation process was monitored and characterized in aid of TOC analysis, UV-Vis spectra, high performance liquid chromatogram, and ion chromatogram. The results showed that the degradation efficiencies of 4-chlorophenol in the present system with Pd-Fe/graphene catalytic cathode were 98.1% (in cathodic chamber), 95.1% (in anodic chamber) under the optimal conditions, which were higher than those of the Pd/graphene catalytic cathode system (93.3% in cathodic chamber, 91.4% in anodic chamber). The chloride ion removal rate was more than 95% in the Pd-Fe/graphene catalytic cathode system, which suggested that the bimetallic catalyst had stronger hydrogenation capacity. 4-chlorophenol could be completely removed within 120 min under the synergetic effect of anodic-cathodic electrochemical degradation. In the cathodic chamber, 4-chlorophenol was initially reduced to form phenol under electrocatalytic hydrolysis. With further oxidation in both cathodic and anodic chambers, phenol was converted into hydroquinone and benzoquinone, then low molecular weight organic acids, and finally CO2 and H2O. Moreover, a reaction pathway involving all these intermediates was proposed.