In this work, mechanical stability and kinetics of hydrogen (de)sorption of thin Palladium films (100 nm) magnetron sputter deposited on a magnetron sputtered Titanium intermediate layer were studied. In particular of two film morphologies, an open voided columnar morphology and a compact columnar morphology, the substrate-induced stress and its relaxation upon hydride formation were investigated at room temperature. By conducting in-situ X-ray diffraction (XRD) measurements combined with line-broadening analysis of the diffraction profiles, it was observed that the α (H-poor phase) to β (H-rich phase) transition induces stress that could (partially) relax by dislocation generation. After several absorption-desorption cycles (at 0.05 atm p(H2)), however, this stress increase prevents a full transformation to the β phase. When applying a higher partial pressure p(H2) = 0.1 atm for both of the selected open and compact-structured Pd/Ti thin films, a full phase transformation was observed. The corresponding phase transition kinetics, stress states and microstructural behaviors of the open and compact-structured Pd/Ti samples were found to be different. The microstructural changes and the kinetics of phase transformation during H2 (de)sorption are explained in terms of stress development and its relaxation through dislocation/defect generation.