Electrochemical reduction of N2 to NH3 provides an alternative to the Haber−Bosch process for sustainable, distributed production of NH3 when powered by renewable electricity. However, the development of such process has been impeded by the lack of efficient electrocatalysts for N2 reduction. Here we report efficient electroreduction of N2 to NH3 on palladium nanoparticles in phosphate buffer solution under ambient conditions, which exhibits high activity and selectivity with an NH3 yield rate of ~4.5 μg mg−1Pd h−1 and a Faradaic efficiency of 8.2% at 0.1 V vs. the reversible hydrogen electrode (corresponding to a low overpotential of 56 mV), outperforming other catalysts including gold and platinum. Density functional theory calculations suggest that the unique activity of palladium originates from its balanced hydrogen evolution activity and the Grotthuss-like hydride transfer mechanism on α-palladium hydride that lowers the free energy barrier of N2 hydrogenation to *N2H, the rate-limiting step for NH3 electrosynthesis.