A method for the aqueous synthesis of stable and biocompatible citrate-coated palladium nanoparticles (PdNPs) in the size range comparable to natural enzymes (4–8 nm) has been developed. The toxicological profile of PdNPs was assessed by different assays on several cell lines demonstrating their safety in vitro also at high particle concentrations. To elucidate their cellular fate upon uptake, the localization of PdNPs was analyzed by Transmission Electron Microscopy (TEM). Moreover, crucial information about their intracellular stability and oxidation state was obtained by Sputtering-Enabled Intracellular X-ray Photoelectron Spectroscopy (SEI-XPS). TEM/XPS results showed significant stability of PdNPs in the cellular environment, an important feature for their biocompatibility and potential for biomedical applications. On the catalytic side, these PdNPs exhibited strong and broad antioxidant activities, being able to mimic the three main antioxidant cellular enzymes, i.e., peroxidase, catalase, and superoxide dismutase. Remarkably, using an experimental model of a human oxidative stress-related disease, we demonstrated the effectiveness of PdNPs as antioxidant nanozymes within the cellular environment, showing that they are able to completely re-establish the physiological Reactive Oxygen Species (ROS) levels in highly compromised intracellular redox conditions.