The nanoparticles composed of Mg and Pd atoms (Mg-Pd NPs) have been fabricated by the gas evaporation method, and the variation of the chemical state during hydro-/dehydrogenations has been investigated by X-ray photoelectron spectroscopy (XPS) and in-situ X-ray absorption fine structure (XAFS) analyses. Both XPS and XAFS spectra have indicated that the Mg-Pd NPs contain the chemical state of the metallic Pd and Mg-Pd alloy phases. The Mg-Pd alloy phase has been identified as MgPd and Mg6Pd by the Pd K-edge EXAFS analysis. The hydrogen release of the Mg-Pd NPs has not been observed after first hydrogenation due to the migration of Mg toward the surface of the Mg-Pd NPs during the hydrogen storage. This irreversible migration has led the inhibition of the hydrogen diffusion into the surface from the inside of the Mg-Pd NPs. Copyright (c) 2014 John Wiley & Sons, Ltd.