The structural and morphological changes occurring in an ensemble of vapor deposited palladium nanoclusters have been studied after several hydrogenation cycles with x-ray diffraction, extended x-ray-absorption fine structure spectroscopy, Rutherford backscattering spectrometry, and STM. Initial hydrogenation increased the cluster size, a result that is attributed to hydrogen-induced Ostwald ripening. This phenomenon originates from the higher mobility of palladium atoms resulting from the low sublimation energy of the palladium hydride as compared to that of the palladium metal. The universality of this phenomenon makes it important for the application of future nanostructured hydrogen storage materials.