We utilized gas-phase condensation to deposit size-selected Pd nanoparticles (NPs) on Mg nanofilms and systematically studied the catalytic conversion to localized MgH2 nanodomains upon exposure to hydrogen. Atomic force microscopy (AFM), aberration corrected transmission electron microscopy (TEM), and electron energy-loss spectroscopy (EELS) experiments were applied to map localized embryonic hydride nanodomains protruding from the Mg surface as a function of hydrogenation time, NP surface coverage, applied hydrogen pressure, and NP size. The results show that Pd NPs dissociate hydrogen and create atomic hydrogen pathways for hydrogenating the Mg nanofilm. The Pd NPs also inhibit oxidation of the underlying Mg nanofilm. Interestingly, the Mg nanofilm could be fully hydrogenated with a small quantity of Pd NPs at room temperature and modest hydrogen pressures. The localized hydrogenation enables improved control over the spatial distribution of hydride nanodomains making this configuration promising for future on-board hydrogen storage applications. (C) 2016 Elsevier Inc. All rights reserved.