Surface behavior of thin Pd film in the course of palladium hydride (PdHx) formation under H-2 pressure of 101 kPa at 298 K and its decomposition in Ar or O-2 atmospheres was studied "in situ" by combined methods of a video technique and atomic force microscopy. The main effort was concentrated on the determination of the role of local defects on the surface in the process of PdH,, formation and its catalytic reaction with oxygen. The formation of PdH, within a thin Pd film causes drastic local changes of the surface corrugation as a result of stress creation and its relaxation within the film. Local surface changes around active sites and evaluation of these changes occurring during successive cycles of H-2/O-2 titration are distinguished and discussed. A comparison of the studied phenomena observed on two significantly different substrates, glass with random distribution of local defects and well-ordered mica with steps and terraces, exhibits differences resulting from the influence of the substrate on the generation of surface defects within the palladium film. Consequently the distribution of active sites in the reaction with hydrogen on thin Pd films reflects the distribution of local point defects on the substrate surface. The applied experimental procedure gives the possibility to distinguish between active sites in nanometric resolution and their evaluation in the course of the studied processes.