The structure and chemical state of supported Pd nanoparticles in contact with H2 in the aqueous phase have been explored by X-ray absorption spectroscopy to better understand their surface reactivity in polar condensed media. The Pd–Pd distances at substantial H2 pressures indicate the presence of sorbed hydrogen and point to the presence of Pd hydrides, proving that such nanoparticles are hardly influenced by the presence of water. During the hydrogenation of the reactants (phenol, cyclohexanone, and cyclohexene), the Pd–Pd bond length decreased, indicating a drastically lower concentration of sorbed H compared to Pd in the absence of the reactants. This steady state concentration of sorbed hydrogen is established by all reactions involving H2, i.e., the sorption/desorption into the bulk, the adsorption at the surface, and the reaction with unsaturated reactants, but not by reaction with water. This demonstrates that neither the Pd particles nor the H/Pd ratio is influenced by water, but dynamically adapt to reaction conditions. Consistently, ab initio molecular dynamic simulations indicate that Pd–water interactions are relatively weak for Pd metal and that these interactions become even weaker, in the presence of H2 and when hydrogen is incorporated into the metal particles.