The work reports the reversible changes of optical transparency of the thin ITO-electrolyte-Pd/Y cell due to the process of cathodic hydrogenation of the Y metal (Y + xH(+) xe(-) --> YHx, approximate to 2.7). Optical absorption measurements were performed in-situ in the wide (400-2000 nm) range of wavelengths. The multistage character of the hydrogenation reaction has been established. The optical switching effect in the cell is reversible and is controlled by the value of the cathodic current density flowing through the cell. The process of cathodic hydrogenation is an appropriate alternative to the hydrogenation of yttrium in gas phase due to better control of the reaction rate. However, the process needs optimization in what concerns the composition of the electrolyte, thickness of the metallic films and their stability towards prolonged contact with electrolyte. Possible ways to improve the longterm stability of the cells are discussed.