Sluggish kinetics of the methanol oxidation reaction (MOR) at the anode of direct methanol fuel cells (DMFCs) is primarily due to adsorbed CO poisoning of precious metal catalysts. CeO2 is known to provide oxygen containing species to adjacent precious metal sites for facilitating CO removal during the MOR. In this work, highly dispersed Pd nanoparticles surrounded by CeO2 dots were deposited on a core–shell structured and nitrogen-doped mesoporous carbon sphere (NMCS) support, which exhibited encouraging electrocatalytic activity, CO tolerance, and stability for the MOR in alkaline media. The ratios of Pd to CeO2 were found crucial for overall catalytic performance enhancement. When compared to a commercial PtRu/C catalyst, an optimized Pd(20%)-CeO2(20%)/NMCS catalyst presented a comparable CO stripping onset potential, ∼6 times higher peak current density, and enhanced cyclic stability. The unique mesoporous carbon with nitrogen doping also benefits for uniform dispersion of Pd nanoparticles and CeO2 dots. In good agreement with experimental spectroscopy analysis, density functional theory calculations suggest that the strong electronic interactions between Pd and surrounding CeO2, as well as nitrogen dopants in supports, dramatically reduce the adsorption energy of CO at the Pd surface, therefore enhancing CO tolerance of the Pd-CeO2/NMCS catalyst and further improving MOR activity. Using a polymer fiber membrane-based alkaline DMFC, the Pd(20%)-CeO2 (20%)/NMCS anode catalyst further demonstrated encouraging performance when a NiCo2O4 catalyst was used for the oxygen cathode.