We assessed a method for the preparation of small, highly stable and unprotected Pd nanoparticles by picosecond laser ablation in 2-propanol. The nanoparticles can be extracted from 2-propanol by centrifugation and redispersed in water, where a strongly negative ζ-potential assures long term stability. The proposed procedure permits reduction of particle size down to 1.6 nm and optimization of the Pd(0):Pd(II) ratio which, in the best cases, was of the order of 6:1. The increase of this ratio with ablation times has been correlated to the high temperature conversion of PdO to metallic Pd by a simple theoretical model. A study of the relationship between colloid absorption at 400 nm and Pd concentration permitted the role of PdO in the determination of the UV-vis spectra to be clarified and the limits of the Mie theory for the evaluation of colloid concentration to be established. The absorption at 400 nm can be used as a fast method to estimate the Pd content in the colloids, provided that a calibration of the ablation process is preliminarily performed.