The formation of small palladium colloidal particles in aqueous solution by electroless reduction of palladium salts is described. The presence of water-soluble polymers, such as polyvinylalcohol (PVA) and polyvinylpyrrolidone improves the colloid-chemical stability of the sols. The formation of the colloidal particles can be easily monitored by open-circuit potential measurements. PVA-stabilized Pd sols are highly catalytic for electroless Ni deposition. They readily induce electroless Ni plating on indium tin oxide substrates, where more classical initiation procedures fail.