Palladium nanoparticles (Pd NPs) are the very good catalytic agents in many coupling reactions, also these are very well biological agents against bacteria and fungus. M. oleifera capped Pd NPs were synthesized from microwave assisted methanolic extract of M. oleifera peel. To optimize the extraction process RSM (Response Surface Methodology) was applied. To get a good extraction yield BBD (Box-Behnken Design) was employed. The better optimized conditions for the extraction was found as 400 W, 25 mL of CH3OH at 65 °C for 2 min. We observed 61.66 mg of extract yield from this method. Eco-friendly M. oleifera capped Pd NPs were synthesized using M. oleifera peel extract and confirmed using the different characterization techniques like UV- Vis spectroscopy, XRD, SEM and HR-TEM analysis. We found the size of the M. oleifera capped Pd NPs nanoparticles as 27 ± 2 nm and shape of the particles as spherical through the TEM analysis. M. oleifera capped Pd NPs exhibits good antibacterial activity against S. aureus (Staphylococcus aureus) and E. coli (Escherichia coli) bacterial strains and we found the zone inhibition as 0.6 and 0.7 mm. The synthesized M. oleifera capped Pd NPs are screened for hemolytic activity and it proved the M. oleifera capped Pd NPs are non-toxic on RBCs cells. © 2016 Elsevier B.V.