We present measurements of the magnetic susceptibility, heat capacity and electrical resistivity of Pu$_{1-x}$Lu$_x$Pd$_3$, with $x$=0, 0.1, 0.2, 0.5, 0.8 and 1. PuPd$_3$ is an antiferromagnetic heavy fermion compound with $T_N=24$~K. With increasing Lu doping, both the Kondo and RKKY interaction strengths fall, as judged by the Sommerfeld coefficient $gamma$ and Neel temperature $T_N$. Fits to a crystal field model of the resistivity also support these conclusions. The paramagnetic effective moment $mu_{mathrm{eff}}$ increases with Lu dilution, indicating a decrease in the Kondo screening. In the highly dilute limit, $mu_{mathrm{eff}}$ approaches the value predicted by intermediate coupling calculations. In conjunction with an observed Schottky peak at $sim$60~K in the magnetic heat capacity, corresponding to a crystal field splitting of $sim$12~meV, a mean-field intermediate coupling model with nearest neighbour interactions has been developed.
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