This work deals with the relationship between morphology of electrolessly deposited Pd membranes and hydrogen permeation. Both concentrated and dilute Pd containing electroless baths were examined. Scanning electron microscopy and X-ray diffraction line broadening analyses revealed the formation of different morphologies due to the deposition kinetics. Crystallization aspects in electroless deposition were discussed. Loosely packed palladium particles being about 420 nm in diameter were formed by repeated depositions from the dilute bath. Dense palladium membranes with primary particle sizes of about 11 nm were deposited from the concentrated bath. Only the latter composite membrane was permselective to hydrogen.