In the present work positron lifetime spectroscopy was employed for investigation of hydrogen-induced defects in Pd. Well annealed polycrystalline Pd samples were electrochemically charged with hydrogen and the development of defects with increasing hydrogen concentration was investigated. At low concentrations (α-phase region, xH < 0.017 H/Pd) hydrogen loading introduced vacancies surrounded by hydrogen atoms and characterized by a positron lifetime of ≈200 ps. When the hydrogen concentration exceeded 0.017 H/Pd the α-phase transformed into the hydrogen rich α′-phase. This generated dislocations characterized by a positron lifetime of ≈170 ps. Dislocations can accommodate a large volume mismatch between the α and the α′-phase. Hardness testing revealed that absorbed hydrogen made Pd harder. In the α-phase region hardness increased due to solid solution hardening caused by dissolved hydrogen. Dislocations created by the α to α′-phase transition caused strain hardening which led to an additional increase of hardness.