The thermal stability of palladium (Pd) Schottky barrier diodes fabricated on bulk p-type Al-doped (5 - 8 x 10(17) cm(-3)) 6H-SiC is reported. Isochronal anneals revealed a steady improvement in the as-deposited Pd contacts for temperatures up to 250 - 300 degreesC, above which the quality progressively deteriorated. Above 600 degreesC the contacts became unusable. The effect of hydrogen on the Pd Schottky diode was investigated by exposing the Pd metallized surface of the SiC to a hydrogen plasma. It was found that Pd became permeable to hydrogen around 250 degreesC, resulting in a subsequent introduction of hydrogen into the near-surface region of the SiC. Capacitance-voltage (C-V) depth profiles of the H-plasma exposed diodes revealed a partial reduction in the near-surface free carrier concentration, suggesting passivation of the Al acceptors by hydrogen. This was confirmed by subsequent reactivation of the electrical activity of the Schottky contact through a series of isothermal reverse bias annealing experiments. Hydrogen was also found to improve the thermal stability of the Pd Schottky diode.