Abstract Selective hydrogenation of acetylene (C 2 H 2 ) to ethylene (C 2 H 4 ) has been recognized as an important strategic reaction for the removal of trace acetylene from ethylene. Palladium‐based alloys are one of the most commonly used catalysts for this reaction but bear a high price and unsatisfactory catalytic performance. Here, we develop a feasible strategy toward the synthesis of a palladium‐silver dilute alloy catalyst (Pd x Ag/Al 2 O 3 ), which contains the Pd 1 Ag single‐atom‐alloy (SAA) and Pd 2 Ag dimer‐alloy (DA) species. This catalyst exhibits a high ethylene (C 2 = ) yield of 90.1 % even after 100 hours at 60 °C, which is 11.9 times higher than that of the PdAg/Al 2 O 3 alloy catalyst. Based on in‐situ spectroscopic investigations and theoretical calculations, both Pd 1 Ag SAA and Pd 2 Ag DA species in Pd x Ag/Al 2 O 3 are easier to desorb C 2 H 4 compared with PdAg/Al 2 O 3 , and they experience the possible hydrogenation paths with the low energy barriers to yield C 2 = . Furthermore, Pd x Ag/Al 2 O 3 is beneficial to restraining coking due to the endothermic C−H bond cleavage. Thus, these combined merits contribute to the superior catalytic performance for Pd x Ag/Al 2 O 3 .