We have investigated the influence of hydrogen passivation on the electronic properties of ultra-thin polycrystalline silicon layers prepared by the aluminum-induced layer exchange process. Hall effect measurements reveal high hole carrier concentrations in the as-grown poly-Si layers up to several times 1019cm−3. We find a drastic increase of the resistivity after hydrogenation for very thin samples, which is attributed to a combination of two effects: (1) the reduction of free holes due to acceptor passivation and (2) compensation of free holes remaining after H-passivation by interface trap states. Temperature-dependent measurements show that the activation energy of the dark conductivity increases strongly after the hydrogenation process. The origin of the compensation was investigated by spin-dependent transport measurements. In addition, the potential of the passivated poly-Si layers for electronic applications was studied. We have demonstrated a normally ON back-gate depletion mode transistor with a two mask process, which exhibits a field-effect mobility of 21cm2/Vs for holes in the 20nm thin channel layer.