A highly sensitive H-2 gas sensor was fabricated using a Micro Electromechanical Systems (MEMS) procedure having an embedded micro-heater. The palladium-silver (Pd/Ag having stoichiometric ratios 77:23) thin film was deposited by the RF/DC magnetron sputtering and used as the hydrogen sensing layer designed as a zig-zag pattern. Morphological and structural properties of the Pd/Ag thin film was studied by Field emission scanning electron microscope (FESEM), Atomic force microscopy (AFM) and Energy Dispersive Analysis of Xrays respectively. The working temperature of the micro heater showed a linear relation with variations of the heater voltage. The electro thermal properties of the H-2 sensor were studied by finite element method (FEM). The sensing properties of the fabricated H-2 sensor as the change of electrical resistance were studied with respect to hydrogen concentration and temperature. Experimental results showed high sensor response and response time after application of the heater voltage. The sensing properties of the alloyed Pd/Ag thin film were more improved than those of pure palladium. The maximum sensor response (R-s) of the fabricated H-2 sensor was 14.26% for 1000 ppm H-2. The sensor response of the fabricated H-2 sensor showed linear behavior with-the heater voltage (operating temperature) and positively corresponded with the hydrogen concentration. (C) 2017 Hydrogen Energy Publications LLC. Published by Elsevier Ltd. All rights reserved.