Highly dispersed, ultrafine Pd nanoparticle decorated carbon nano-onions (CNO) were prepared by a facile, one-step sonochemical method. The presence of surface functional groups and the mesoporosity of the as-prepared CNO helped achieve high nanoparticle dispersion at a high Pd loading with a marginal effect on the particle size under the sonochemical conditions. The Pd loading in the catalyst was varied as 18, 28 and 60 weight percent (wt%). The average size of Pd nanoparticles was around 2 nm up to 28 wt% loading and increases to 4 nm at 60 wt% loading. The electrocatalytic performance of Pd decorated CNOs were evaluated using formaldehyde oxidation in alkaline media. The electrochemically active surface area and the peak current density for formaldehyde electrooxidation increased with Pd loading up to 28 wt%. This suggests that the effect of metal loading dominates the particle size effect in CNO supported electrocatalysts if a high metal loading is achieved with a high degree of nanoparticle dispersion and better size control. The study also demonstrates that by selecting a suitable support material and controlling the synthesis conditions, the particle size and dispersion can be controlled while achieving high mass loading in an electrocatalyst.