Photocatalytic co-production of high value-added multicarbon compounds and hydrogen from renewable bioethanol is an environmental and long-term approach to industrial activities and remains a great challenge because of the difficulty in bioethanol dehydrogenation. Guided by first-principle simulation, we first synthesized a partially reduced Pd–P3 single atom (PdPSA) on CdS nanorods with an unoccupied hybrid state of Pd 4d and P 3p via both metal-support interaction effect and Pd–P coordination effect. This unique electronic structure of PdPSA is totally different from highly reduced S-coordinated Pd single atoms or nanoparticles and allows PdPSA-CdS to exhibit a visible-light photocatalytic activity of 35.1 mmol g−1 h−1 for the co-production of high-value-added 1,1-diethoxyethane and H2 with a selectivity of 100%. Mechanism studies revealed that the unoccupied hybrid states of Pd 4d and P 3p in PdPSA not only greatly promoted the dehydrogenation of ethanol but also promised PdPSA with a high H2-production activity.