The synthesis and stabilization of Pd nanoclusters on a support, as well as simultaneously achieving optimal catalytic activity, remain challenging tasks. Functionalizing the support surface with specific ligands offers a promising solution, but it often requires carefully balancing trade-offs between the reaction yield and catalyst stability. Here, we used two different ligands (propylamine and propylthiol) to functionalize the layered silicate's interlayer surface for Pd nanocluster synthesis and stabilization. For dehydrogenating formic acid, Pd nanoclusters on aminopropyl groups achieved a catalytic activity ∼27-fold higher than that of thiopropyl groups at 70 °C. Our density functional calculations compared the adsorption energetics and bonding characteristics of single Pd atoms and Pd13 nanoclusters on amino- and thio-functionalized silicate surfaces. Pd-N bonds were predicted to be weaker with minimal covalency, while Pd-S bonds exhibit greater covalency due to higher 4d-3p hybridization, resulting in better stability. However, Pd13 clusters undergo severe structural deformation on thiol-functionalized surfaces, resulting in a smaller overall surface area and diminished catalytic stability.