The catalytic properties of various metal nanoparticles have led to their use in environmental remediation. Our aim is to develop and apply an efficient bioremediation method based on in situ biosynthesis of bio-Pd nanoparticles and hydrogen. C. pasteurianum BC1 was used to reduce Pd(II) ions to form Pd nanoparticles (bio-Pd) that primarily precipitated on the cell wall and in the cytoplasm. C. pasteurianum BC1 cells, loaded with bio-Pd nanoparticle in the presence of glucose, were subsequently used to fermentatively produce hydrogen and to effectively catalyze the removal of soluble Cr(VI) via reductive transformation to insoluble Cr(III) species. Batch and aquifer microcosm experiments using C. pasteurianum BC1 cells loaded with bio-Pd showed efficient reductive Cr(VI) removal, while in control experiments with killed or viable but Pd-free bacterial cultures no reductive Cr(VI) removal was observed. Our results suggest a novel process where the in situ microbial production of hydrogen is directly coupled to the catalytic bio-Pd mediated reduction of chromate. This process offers significant advantages over the current groundwater treatment technologies that rely on introducing preformed catalytic nanoparticles into groundwater treatment zones and the costly addition of molecular hydrogen to above ground pump and treat systems.