To develop high-performance bimetallic catalysts, fine control over both the ligand and strain effects of secondary elements on the catalytic function of primary elements is crucial. Here we introduce an approach to produce Pd–Ag bimetallic core–shell nanocatalysts with synergistic regulation of the ligand and strain effects of Ag. Through precise core–shell engineering, (PdAg alloy core)@(ultrathin Pd shell) nanocrystals with controlled core compositions and shell thicknesses in addition to a well-defined octahedral morphology could be realized. The prepared octahedral PdAg@Pd core–shell nanocrystals exhibited pronounced catalytic performance toward hydrogen production from formic acid decomposition. The maximum catalytic activity was achieved with PdAg@Pd nanocrystals consisting of PdAg alloy cores with an average Pd/Ag atomic ratio of 3.5:1 and 1.1 atomic layer of Pd shells, which showed a record high turnover frequency of 21 500 h–1 at 50 °C. This catalytic function could be attributed to the optimized combination of the electronic promotion and lattice strain effects of Ag on Pd. We envision that the present work can provide a rational guideline for the design of improved catalysts for various important chemical and electrochemical reactions.