Escherichia coli produces at least three [NiFe] hydrogenases (Hyd-1, Hyd-2 and Hyd-3). Hyd-1 and Hyd-2 are membrane-bound respiratory isoenzymes with their catalytic subunits exposed to the periplasmic side of the membrane. Hyd-3 is part of the cytoplasmically oriented formate hydrogenlyase complex. In this work the involvement of each of these hydrogenases in Pd(II) reduction under acidic (pH 2.4) conditions was studied. While all three hydrogenases could contribute to Pd(II) reduction, the presence of either periplasmic hydrogenase (Hyd-1 or Hyd-2) was required to observe Pd(II) reduction rates comparable to the parent strain. An E. coli mutant strain genetically deprived of all hydrogenase activity showed negligible Pd(II) reduction. Electron microscopy suggested that the location of the resulting Pd(0) deposits was as expected from the subcellular localization of the particular hydrogenase involved in the reduction process. Membrane separation experiments established that Pd(II) reductase activity is membrane-bound and that hydrogenases are required to initiate Pd(II) reduction. The catalytic activity of the resulting Pd(0) nanoparticles in the reduction of Cr(VI) to Cr(III) varied according to the E. coli mutant strain used for the initial bioreduction of Pd(II). Optimum Cr(VI) reduction, comparable to that observed with a commercial Pd catalyst, was observed when the bio-Pd(0) catalytic particles were prepared from a strain containing an active Hyd-1. The results are discussed in the context of economic production of novel nanometallic catalysts.