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We report the magnetic behavior of isolated Fe impurity atoms in Pd 1− x U x (0 ≤ x ≤ 0.12) alloys studied through measurements of the local susceptibility (χ loc) and spin relaxation time for 54Fe nuclear probe using the time differential perturbed angular distribution (TDPAD) technique. With an increase of the U concentration in Pd-U alloys, the magnetic response of Fe, exhibiting Curie-Weiss type χ loc (T), reflects a steady decrease of the giant magnetic moment arising from ferromagnetic polarization of host Pd-4d band electrons. Concomitantly, we find an exponential rise in the spin fluctuation temperature T SF. The experimental observation of U induced suppression of giant magnetic moment of Fe in Pd is supported by ab intio electronic structure calculations based on density functional theory. The results presented here support the idea that sign and strength of spin polarization of host conduction band electrons play a crucial role on the spin fluctuation rate and hence moment stability. • Fe shows Curie-Weiss type local susceptibility in Pd-U binary alloys. • Exponential rise in Spin fluctuation temperature T SF with Uranium concentration. • The sign and strength of spin polarization of host conduction band electrons play a major role in the spin fluctuation rate. • Beyond x = 0.12 (Pd 1− x U x), the Fe atoms become nonmagnetic due to large spin fluctuation. [ABSTRACT FROM AUTHOR]