Pd/Fe bimetallic catalysts were synthesized via chemical deposition and used to eliminate chlorine compacted in shellac while it was being bleached with sodium hypochlorite in alkaline solution for the preparation of low chlorine shellac, a natural and biological product used in large scale in food industry and pharmaceutical fields. Experiments demonstrated that the Pd/Fe bimetallic particles could catalyze dechlorination process effectively, which was affected by several factors such as reaction temperature, Pd/Fe ratio, and the induction of Pd/Fe. The dechlorination efficiency reached 81.9% under the conditions of Pd/Fe loading ratio of 0.10wt%, binary metal usage 10 g/L, H2 flowing rate 50 mL/min, and reaction temperature 90°C for 240 min. Moreover, the mechanism of catalytic hydrogenation was elucidated through structure characterization of the final products using elementary analysis, infrared spectroscopy, and ultraviolet spectrophotometer. It was shown from the result of ultraviolet spectrophotometer that the wavelength of the maximum absorption of seedlac, the raw materials for obtaining shellac, was 235 nm. However, it was blue shifted to the same value 222 nm when the shellac was dechlorinated by catalytic hydrogenation with Pd/Fe binary metal particle as the shellac without catalyzed. The results of elementary analysis showed that chlorine content in the final product was only 0.46%, just 1/5 comparing to that of non-declorination by catalytic hydrogenation under the optimum conditions. It was shown that the chlorine ions compacted in the shellac was substituted by hydrogen ions.