The chemoselective reduction of a broad variety of functional groups by a Pd/C–Al–H2O system is described. The reduction is based on the reaction of Al with the solvent water that in situ produces hydrogen that is utilized by the supported Pd catalyst toward the hydrogenation of the target functional groups. The hydrogenations are carried out under mild conditions and provided the products in high yields and selectivity. The reduction system appeared to be effective for a broad range of functional groups, including C–C, C–N, C–O and N–O multiple bonds, aromatic rings, hydrogenolysis of C–O, C–N and C–Halogen bonds. The appropriate selection of the reaction conditions allowed the selective preparation of different products from the same substrate. The simplicity, cost, tunability and the environmentally benign character of the catalytic system offer numerous advantages over the currently available methods.