Graphene decorated by palladium (Pd) nanoparticles has been investigated for hydrogen sensor applications. The density of Pd nanoparticles is critical for the sensor performance. We develop a new chemical method to deposit high-density, small-size and uniformly-distributed Pd nanoparticles on graphene. With this method, Pd precursors are connected to the graphene by π-π bonds without introducing additional defects in the hexagonal carbon lattice. Our method is simple, cheap, and compatible with complementary metal-oxide semiconductor (CMOS) technology. This method is used to fabricate hydrogen sensors on 3-inch silicon wafers. The sensors show high performance at room temperature. Particularly, the sensors present a shorter recovery time under light illumination. The sensing mechanism is explained and discussed. The proposed deposition method facilitates mass fabrication of the graphene sensors and allows integration with CMOS circuits for practical applications.