Thermally evaporated and laser-ablated Pd atoms interact with H-2 in excess argon to form the side-bonded Pd(H-2) complex, which is characterized by 2971, 1507, and 950 cm(-1) fundamental frequencies. These infrared absorptions are assigned to Pd(H-2) on the basis of the HD and D-2 shifts and DFT frequency calculations. Higher H-2 concentrations favor the Pd(H-2)(2,3) complexes, which exhibit 3038, 778 cm(-1) and 2909, 730, 319 cm(-1) fundamentals, respectively. These complexes involve electrostatic bonding owing to a small amount of charge reorganization. Higher Pd concentrations enhance absorptions due to a Pd--Pd(H-2) complex and the stable (PdH)(2) molecule with no H-H bond. This work shows that one neutral Pd atom cannot insert into a H-2 molecule but that two Pd atoms dissociate molecular hydrogen with no activation energy. Laser ablation produces energetic Pd atoms which also form PdH, electrons which are captured to give PdH2-, and radiation which ionizes H and yields ArnH+ in the matrix cage. Diatomic PdH also forms complexes with dihydrogen.