We have studied the interaction of gas-phase atomic H(g) (D(g)) with H(a) (D(a)) atoms preadsorbed on the Pd(100) surface. The preadsorbed atoms are forced by the impinging atoms to be absorbed into the Pd substrate. The absorbed hydrogen, H(b), was found to occupy the subsurface site just beneath the surface and its saturation coverage was determined to be 1.06 +/- 0.16 monolayer (ML). The cross sections for the absorption were found to be different between the cases with and without subsurface H atoms just beneath the surface species, and are estimated to be 2.1 +/- 0.6 and 5.3 +/- 1.5 Angstrom(2), respectively. Upon annealing the sample, H atoms in the subsurface sites diffuse into the bulk at 210 K, from which the activation energy for in-diffusion of 0.56 +/- 0.03 eV was determined, and desorb recombinatively at similar to 280 K. Upon further exposure to H(g) atoms, as much as 8 MLs of bulk hydride form near the surface region which are decomposed at 200 K giving rise to H-2 desorption.