Pd nanoparticles are deposited on one surface of a quartz sheet. Their optical nonlinearity and ultrafast dynamics in air and in hydrogen environment are investigated. The Pd nanoparticles exhibit self focusing and saturable absorption in air. In hydrogen environment with increasing hydrogen, the NPs maintain self focusing, however their nonlinear refraction index increases; and their nonlinear absorption changes from saturable absorption to reverse saturable absorption. In hydrogen environment, the acoustic breathing movement of these NPs damps more obviously and the contact between the NPs and quartz sheet is looser, comparing to that in air. (C) 2015 Elsevier B.V. All rights reserved.