Structure-sensitive catalyzed reactions can be influenced by a number of parameters. So far, it has been established that the formation of Pd-C species is responsible for the behavior of Pd nanoparticles employed as catalysts in a butadiene partial hydrogenation reaction. In this study, we introduce some experimental evidence indicating that subsurface Pd hydride species are governing the reactivity of this reaction. In particular, we detect that the extent of formation/decomposition of PdHx species is very sensitive to the Pd nanoparticle aggregate dimensions, and this finally controls the selectivity in this process. The main and direct methodology applied to determine this reaction mechanism step is time-resolved high-energy X-ray diffraction (HEXRD).