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A novel and sustainable synthesis of a Pd/CN@MgO catalyst is presented here, offering a bifunctional catalyst with high catalytic activity towards a tandem aldol condensation-hydrogenation reaction of furfural with acetone in a one-pot reactor. The incorporation of biomass based hydrophilic N-containing carbon (CN) in the catalyst provides a subtle but elegant method to control the good water dispersibility, the reaction stability, and the ultrafine dispersion of palladium particles (2.2 nm in average size) in the bifunctional catalyst Pd/CN@MgO. With such improved features, an impressive 99% furfural conversion and 95% selectivity for the hydrogenated products (saturated ketones) was obtained by using Pd/CN@MgO as a novel bifunctional catalyst in the reported tandem reaction. This catalyst design strategy and the high efficiency of the catalyst in the reported system offer potential for the preparation of bi/ multifunctional catalysts and the one-pot synthesis of bioderived intermediates. [ABSTRACT FROM AUTHOR]