Incorporating metal nanoparticles into polymer membranes can endow the membranes with additional functions. This work explores the development of catalytic polymer membrane through synthesis of palladium nanoparticles based on the approaches of intermatrix synthesis (IMS) inside surface functionalized polyethersulfone (PES) membrane and its application to liquid phase reactions. Flat sheet PES membranes have been successfully modified via UV-induced graft polymerization of acrylic acid monomer. Palladium nanoparticles have been synthesized by chemical reduction of palladium precursor loaded on surface modified membranes, an approach to the design of membranes modified with nanomaterials. The catalytic performances of the nanoparticle incorporated membranes have been evaluated by the liquid phase reduction of p-nitrophenol using NaBH4 as a reductant in flow-through membrane reactor configuration. The nanocomposite membranes containing palladium nanoparticles were catalytically efficient in achieving a nearly 100% conversion and the conversion was found to be dependent on the flux, amount of catalyst, and initial concentration of nitrophenol. The proposed mathematical model equation represents satisfactorily the reaction and transport phenomena in flow-through catalytic membrane reactor.