Phosphorous oxide (P_xO_y)-incorporated carbon nanotubes (PCNTs) and nitric acid treated carbon nanotubes (OCNTs) are first synthesized, then phosphorous modified palladium nanoparticles (Pd-P NPs) supported on PCNTs (Pd-P/PCNTs) and OCNTs (Pd-P/OCNTs) are synthesized and employed as electrocatalysts in a methanol oxidation reaction. Pd-P/PCNTs show enhanced electrocatalytic activity and stability in comparison to Pd-P/OCNTs. Combining surface analysis and electrochemical performance, P_xO_y incorporated into CNTs could create anchoring sites for Pd ions and P precursors, which could facilitate the synthesis of Pd-P NPs in an aqueous solution containing Pd ions and sodium hypophosphite serving as a reducing agent and a P source. The electronic modification of embedded Pd-P NPs on P_xO_y-incorporated CNTs accounts for the enhanced electrochemical performance of Pd-P/PCNTs.