Research on catalytic oxidation in a promising but mild manner to remove formaldehyde and produce hydrogen is rarely reported. Here, the use of the Ti3AlC2 MAX phase as support for palladium nanoparticles was explored for the hydrogen generation from alkaline formaldehyde solution at room temperature. The results showed that Ti3AlC2/Pd catalyst with 3 wt% Pd loading had a much higher capability for hydrogen production than conventional Pd nanoparticles. In addition, by further optimizing the formaldehyde concentration, NaOH concentration, and the reaction temperature, the hydrogen production rate could be further increased to 291.6 mL min−1g−1. Moreover, the obtained apparent activation energy of the Ti3AlC2/Pd catalyzed hydrogen production reaction is 39.48 kJ mol−1, which is much lower than that of the literature results (65 kJ mol−1). The prepared Ti3AlC2/Pd catalysts as well as the catalytic process could act as a “two birds with one stone” effect, that is, they not only eliminate noxious formaldehyde but also generate clean hydrogen.