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Abstract Direct ethanol fuel cells have been widely investigated as nontoxic and low-corrosive energy conversion devices with high energy and power densities. It is still challenging to develop high-activity and durable catalysts for a complete ethanol oxidation reaction on the anode and accelerated oxygen reduction reaction on the cathode. The materials’ physics and chemistry at the catalytic interface play a vital role in determining the overall performance of the catalysts. Herein, we propose a Pd/Co@N-C catalyst that can be used as a model system to study the synergism and engineering at the solid-solid interface. Particularly, the transformation of amorphous carbon to highly graphitic carbon promoted by cobalt nanoparticles helps achieve the spatial confinement effect, which prevents structural degradation of the catalysts. The strong catalyst-support and electronic effects at the interface between palladium and Co@N-C endow the electron-deficient state of palladium, which enhances the electron transfer and improved activity/durability. The Pd/Co@N-C delivers a maximum power density of 438 mW cm −2 in direct ethanol fuel cells and can be operated stably for more than 1000 hours. This work presents a strategy for the ingenious catalyst structural design that will promote the development of fuel cells and other sustainable energy-related technologies.