Porous carbon-encapsulated Ni and Ni–Sn intermetallic compound catalysts were prepared by the one-pot extended Stöber method followed by carbonization and tested for in-situ hydrothermal deoxygenation of methyl palmitate with methanol as the hydrogen donor. During the catalyst preparation, Sn doping reduces the size of carbon spheres, and the formation of Ni–Sn intermetallic compounds restrain the graphitization, contributing to larger pore volume and pore diameter. Consequently, a more facile mass transfer occurs in carbon-encapsulated Ni–Sn intermetallic compound catalysts than in carbon-encapsulated Ni catalysts. During the in-situ hydrothermal deoxygenation, the synergism between Ni and Sn favors palmitic acid hydrogenation to a highly reactive hexadecanal that easily either decarbonylate to n-pentadecane or is hydrogenated to hexadecanol. At high reaction temperature, hexadecanol undergoes dehydrogenation–decarbonylation, generating n-pentadecane. Also, the C–C bond hydrolysis and methanation are suppressed on Ni–Sn intermetallic compounds, favorable for increasing the carbon yield and reducing the H₂ consumption. The n-pentadecane and n-hexadecane yields reached 88.1% and 92.8% on carbon-encapsulated Ni₃Sn₂ intermetallic compound at 330 °C. After washing and H₂ reduction, the carbon-encapsulated Ni₃Sn₂ intermetallic compound remains stable during three recycling cycles. This is ascribed to the carbon confinement that effectively suppresses the sintering and loss of metal particles under harsh hydrothermal conditions.