The shape-controlled synthesis of nanoparticles was established in single-phase solutions by controlling growth directions of crystalline facets on seed nanocrystals kinetically; however, it was difficult to rationally predict and design nanoparticle shapes. Here we introduce a methodology to fabricate nanoparticles in smaller sizes by evolving shapes thermodynamically. This strategy enables a more rational approach to fabricate shaped nanoparticles by etching specific positions of atoms on facets of seed nanocrystals in reverse micelle reactors where the surface energy gradient induces desorption of atoms on specific locations on the seed surfaces. From seeds of 12-nm palladium nanocubes, the shape is evolved to concave nanocubes and finally hollow nanocages in the size ~10 nm by etching the centre of {200} facets. The high surface area-to-volume ratio and the exposure of a large number of palladium atoms on ledge and kink sites of hollow nanocages are advantageous to enhance catalytic activity and recyclability.