We report the hydrogen sensing properties of palladium capped magnesium (Pd/Mg) thin films deposited on electrochemically etched porous silicon substrate using DC magnetron sputtering. The change in electrical resistance is found to be reversible during hydrogenation/dehydrogenation process. The influence of surface energy and hydrophobicity on the hydrogen sensing properties of the Pd/Mg thin film has been studied. Porous structure of silicon substrate allowed hydrophobicity and high surface area for film deposition and prevented the delaminating of material from the surface under humid conditions. The Pd/Mg thin film was found to be mechanically stable for several hydrogenation/dehydrogenation cycles. The studied Pd/Mg thin films coated on porous silicon substrate can be used as a fast response, affordable and low temperature hydrogen sensing material.