In this work, we report synthesis, crystallographic, spectroscopic and quantum chemical studies of a new imine oxime, namely (4-nitro-phenyl)-(1-phenyl-ethylimino)-acetaldehyde oxime (nppeieoH). Spectroscopic and X-ray diffraction studies showed that nppeieoH is hydrolyzed in aqueous solution, forming nitroisonitrosoacetophenone (ninap) and the hydrolysis product binds to Pd(II) to yield [Pd(nppeieo)(ninap)]. The mechanism of the hydrolysis reaction has been theoretically investigated in detail, using density functional theory (DFT) with the B3LYP method. The vibrational and the electronic spectra of nppeieoH and its Pd(II) complex, the HOMO and LUMO analysis, Mulliken atomic charges and molecular electrostatic potential were also performed. The predicted nonlinear optical properties of both compounds are higher than those of urea.