Metal hydrides may play a paramount role in a future hydrogen economy. While most applications are based on nanostructured and confined materials, studies considering the structural response of these materials to hydrogen concentrate on bulk material. Here, using in situ in- and out-of-plane X-ray diffraction and reflectometry, we study the fcc ↔ fct transition in Hf thin films, an optical hydrogen-sensing material. We show that the confinement of Hf affects this transition: compared to bulk Hf, the transition is pushed to a higher hydrogen-to-metal ratio, the tetragonality of the fct phase is reduced, and phase coexistence is suppressed. These nanoconfinement effects ensure the hysteresis-free response of hafnium to hydrogen, enabling its remarkable performance as a hydrogen-sensing material. In a wider perspective, the results highlight the profound influences of the nanostructuring and nanoconfinement of metal hydrides on their structural response to hydrogen with a significant impact on their applicability in future devices.