Electrochemical synthesis of HO through a selective two-electron (2e) oxygen reduction reaction (ORR) is an attractive alternative to the industrial anthraquinone oxidation method, as it allows decentralized HO production. Herein, we report that the synergistic interaction between partially oxidized palladium (Pd) and oxygen-functionalized carbon can promote 2e ORR in acidic electrolytes. An electrocatalyst synthesized by solution deposition of amorphous Pd clusters (Pd and Pd) onto mildly oxidized carbon nanotubes (Pd-OCNT) shows nearly 100% selectivity toward HO and a positive shift of ORR onset potential by ~320 mV compared with the OCNT substrate. A high mass activity (1.946 A mg at 0.45 V) of Pd-OCNT is achieved. Extended X-ray absorption fine structure characterization and density functional theory calculations suggest that the interaction between Pd clusters and the nearby oxygen-containing functional groups is key for the high selectivity and activity for 2e ORR.