Polyethylene glycol (PEG)-stabilized palladium nanoparticles were prepared and applied to the selective hydrogenation of 1,5-cyclooctadiene (1,5-COD) in thermoregulated PEG biphase system, which allows a reaction in a single-phase at a higher temperature followed by a phase split at a lower temperature. Under the optimized reaction conditions, the conversion of 1,5-COD and the selectivity of cyclooctene (COE) were 100 and 98%, respectively. The catalyst could be easily separated from the product by phase separation and reused for 6 times without evident loss in activity and selectivity.