•The Pd/α-MoC catalyst demonstrates an overwhelming selectivity to MMP.•Water treatment induces the formation of a thin layer of MoO3 on catalyst surface.•The heterogeneous layer significantly increases the acidity of modified catalyst.•The unexpected activity is attributed to the synergy between Pd and MoC/MoO3 layer. Selective hydrodeoxygenation of biomass and its derivatives to produce chemicals and biofuels is an effective upgrading strategy to achieve global sustainable development goals. Through the development and utilization of renewable resources, sustainable consumption and production patterns can be promoted and climate change and its impacts can be addressed. Herein, selective hydrodeoxygenation (HDO) of vanillin was conducted by utilizing a Pd/α-MoC catalyst modified with solvent water. The water modification induced the formation of a thin layer of molybdenum oxide on the Pd/α-MoC catalyst surface, which significantly promotes the selective hydrodeoxygenation of vanillin. The conversion of vanillin over the modified Pd/α-MoC catalyst reached 99.9 %, while the selectivity to 4-methyl-2-methoxyphenol (MMP) reached 99.9 % at 0.3 MPa H2 and 80 °C. Comprehensive characterizations elucidate that the heterogeneous layer on the surface of the modified catalyst significantly increases the acidity of the catalyst and improves the removal efficiency of hydroxyl groups, thus improving the high selectivity to the desired product. Moreover, the side reactions are inhibited due to the using of water as the solvent, which contributes a high carbon balance. The modified Pd/α-MoC catalyst exhibits efficient hydrodeoxygenation of vanillin under mild conditions, which suggests an avenue for chemical transformations of biomass derivatives into high value chemicals.