The structure and hydrogen storage behavior of Pd-decorated nitrogen-doped graphene are investigated using the first principals based on density functional theory (DFT) calculations. Among the three types of defective structures, it is found that Pd-decorated graphene with pyridinic and pyrrolic N-doped defects are more stable and exhibit hydrogen uptake ability up to three H-2 per Pd atom. A single H-2 or two H-2 are molecularly chemisorbed on the Pd atom, where the stretched H-H bond is relaxed but not dissociated. The binding mechanism of H-2 molecule is attributed to hybridization of the 4d orbitals of Pd with the sigma orbitals of H-2 (so-called Kubas interaction). Out of two adsorbed H-2, the first and second H-2 are still chemisorbed molecularly, the nature of bonding is very weak physisorption for the third adsorbed H-2. Double-side Pd-decorated graphene with pyridinic and pyrrolic N defects can theoretically reach a gravimetric capacity of 1.99 wt.% hydrogen, which is very close to the recent experimental finding. (C) 2013 Elsevier B.V. All rights reserved.