Trihexyl(tetradecyl)phosphonium ionic liquids (ILs) are found to support the formation of Pd(0) nanoparticles without the addition of reducing agents such as NaBH₄. The resulting particles are highly crystalline and have been characterized by a range of techniques including TEM and XRD. Their sizes are in the range 7 ± 2 nm. The particle formation process is highly dependent on the anion of the IL with no nanoparticles observed when the chloride derivative was used. Particle shape could be controlled through varying the anion of the IL and the Pd(II) precursor used. Palladium chloride reagents gave truncated octahedron shaped particles in trihexyl(tetradecyl)phosphonium dodecylbenzenesulfonate, whereas palladium acetate under the same conditions afforded a mixture of shapes including triangular plates. We propose that the presence of chloride anions in the reaction mixtures led to oxidative etching of the particles and that this process can be reduced in the presence of certain anion partners in the IL including bis(2,4,4-trimethylpentyl)phosphinate. Two possible reduction mechanisms based on reactions of the phosphonium cation are suggested for the formation of the Pd(0) species. The resulting nanoparticles are effective in catalyzing the Suzuki reaction of 4-bromotoluene and benzene boronic acid.