A highly active hydrotalcite-supported Ag/Pd bimetallic nanocluster catalyst has been developed by a simple, easy and safe chemical reduction method. The catalyst was characterized by high-resolution transmission electron microscopy (HR-TEM), which revealed very small (3.2 ± 0.7 nm) nanoclusters with a narrow size distribution. The bimetallic Ag/Pd catalyst showed strong cooperation between Ag and Pd for the alcohol oxidation reaction. The developed catalyst provided an efficient and environmentally friendly method for alcohol oxidation and one-pot cross-aldol condensation in water. A broad scope of α,β-unsaturated ketones with good to excellent yields were obtained under very mild conditions. This catalytic system offers an easy preparation method with a simple recovery process, good activity and reusability of up to five cycles without significant loss in the catalytic activity.