According to the present invention, hydrazine or a hydrazine compound is added to an acidic solution containing silver and palladium as ions to thereby reduce-separate silver-palladium alloy fine powders having an average particle diameter of 0.01-1.0 micron. The powders may be heat-treated at 100.degree.-500.degree. C. in an inert atmosphere or vacuum to thereby obtain silver-palladium alloy fine powders that have an average particle diameter of 0.01-1.0 micron and are usable in the manufacture of ceramic capacitors.