Effective catalysts stabilize specific transition states and control the transport of species to and from catalytically active sites. Enzymes show these traits thanks to their diverse amino acid functional groups encapsulating metal centres, but are limited in the reaction conditions in which they can operate. Realizing a catalyst with this kinetic and transport control that can be used under demanding industrial conditions is challenging. Here, we show a modular approach for the systematic synthesis of polymer–nanocrystal hybrids, where palladium nanocrystals are encapsulated within tunable microporous polymer layers. The polymer chemistry and morphology control the catalytic performance of the metal sites, affecting the transition state for CO oxidation and controlling the transport of CO2 away from the active site. This approach can be applied to other polymer–nanocrystal compositions and catalytic applications, and is therefore expected to have an impact in many areas of catalysis. Encapsulation is an effective strategy to tune metal-catalysed reactions, although its potential has not been fully explored. Here, design principles and advanced understanding of the reactivity of different polymer-encapsulated Pd nanocrystals are provided using CO oxidation as a benchmark reaction.