The surface of sol-gel grown nickel oxide (NiO) thin films is partially covered by palladium nanoparticles via pulsed laser deposition (PLD). The structural and morphological properties of the NiO:Pd films are studied using X-ray Diffraction, Scanning Electron Microscopy (SEM), and Atomic Force Microscopy (AFM). We find that the films crystallize in the cubic NiO structure. AFM images show the palladium nanoparticle size and morphology depend on the pulsed laser deposition time, while the NiO film surface remains granular and smooth. As grown NiO and NiO:Pd compound thin films are tested as hydrogen sensors. The response of NiO and NiO:Pd (for 1 min and 2 min Pd deposition time) thin films to hydrogen is investigated for different operating temperatures and hydrogen concentrations. The addition of palladium nanoparticles on the NiO surface decreases the detection limit, the operating temperature, and the response time of the sensors. A correlation of the nanoparticles concentration with the optimum operating temperature is found, which may lead to hydrogen selectivity in sensor arrays. Copyright (C) 2015, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.