Molybdenum disulfide nanosheets covalently modified with a 1,2-dithiolane derivative were used as a novel substrate for the immobilization of Pd nanoparticles (Pd_NPs) towards the development of a highly efficient hybrid electrocatalyst, namely Pd_NPs/f-MoS₂, for the oxygen reduction in an alkaline medium. The newly prepared hybrid material was thoroughly characterized through complementary techniques such as Raman and IR spectroscopy, TGA, HRTEM, STEM/EELS, and EDS. The Pd_NPs/f-MoS₂ nanohybrid exhibited excellent performance towards oxygen electroreduction with a positive onset potential of +0.066 V and a half-wave potential of −0.116 V vs. Hg/HgO, along with a high current response, which are superior to those of its graphene counterpart and comparable to those of the benchmark Pd/C product. Moreover, Pd_NPs/f-MoS₂ was proved to be remarkably stable as chronoamperometric assays showed minimum activity loss among the tested materials, clearly outperforming the commercial catalyst. The excellent performance of Pd_NPs/f-MoS₂ is attributable to (i) the high affinity of the catalytic Pd_NPs with the f-MoS₂ substrate, (ii) the absence of any capping agent for the stabilization of Pd_NPs onto f-MoS₂, and more importantly (iii) the preservation of the integrity of the MoS₂ basal plane during the functionalization process. Lastly, the oxygen reduction on Pd_NPs/f-MoS₂ proceeded through the energy efficient four-electron pathway, showing great potential for the use of layered transition metal dichalcogenides in energy conversion applications, comprising fuel cells.