The use of nanoparticles (NPs) for efficient, environmentally benign catalysis is receiving increasing attention, with gold and palladium NPs being an important area of research. Herein we present a simple, reliable and cost-effective preparation of a catalytically active gold-palladium NP system that is stabilized by an aqueous titania dispersion (AuPd/TiO2) in the absence of organic ligands. The major advantages of this system are that it is catalytically active in the as-prepared colloidal state, eliminating the need for drying and sintering before use and is colloidally stable in oxidative conditions. The AuPd/TiO2 system exhibits efficient oxidative catalysis in both the presence of hydrogen peroxide and atmospheric oxygen, even at ambient temperatures for our model aqueous phase reaction of 1-phenylethanol oxidation. The preparation and characterization of the AuPd/TiO2 system is described with respect to the effects of colloidal stability, particle size and morphology on aqueous oxidative catalysis. The major finding is that NPs with a gold core and thin palladium shell (70 mol% gold, 30 mol% palladium, Au70Pd30/TiO2) provides the most catalytically active system. The ability of the catalyst to use atmospheric oxygen at ambient temperatures in aqueous media highlights the strong potential of the developed catalytic system for green oxidative processes. The presented approach provides a new platform of all-inorganic colloidal nanoparticle systems for future development of industrially viable, environmentally friendly catalysts.