The structure at the interface between elements or phases that exhibit different hydrogen (H) binding energies exerts a profound influence on the thermodynamics of H in nanophase materials. In this paper, we study the local structure at the Mg/Pd interface in Mg nanoparticles with partial Pd coating, and we map its evolution in response to annealing and H sorption. This task is accomplished by x-ray photoelectron spectroscopy and x-ray absorption spectroscopy, also including in situ experiments, with the support of crystallographic information from x-ray diffraction. It is shown that the initial Pd surface layer reacts with Mg at relatively low temperatures, leading to irreversible formation of a Mg-rich intermetallic phase Mg 6 Pd. Due to the high Mg-H binding energy, this phase reversibly transforms, upon H absorption, into a nanophase mixture of magnesium hydride and a Pd-rich intermetallic with H in solid solution …