Thin films of Pd and Pd-alloys play a significant role in developing membrane reactors for hydrogen production and hydrogen sensors. The long-term stability and absorption/desorption properties of thin films on a substrate is strongly affected by the morphology of the layer.  Several Pd-films are produced using magnetron sputtering on various substrates. By controlling the sputter conditions and surface of the substrate thin films with a dedicated grain shape, crystallographic texture, and film-substrate adhesion were prepared and investigated during hydrogen absorption/desorption cycles. It was shown that different morphologies and clamping strengths result in different absorption properties and stress development. In the case of strong clamping hydrogen absorption is greatly reduced. In all cases the stress-increase, caused by repeated phase transition from Pd to Pd-H stabilizes, after a few cycles. The stress is released by small crystallographic changes and changes in the dislocation density when the film is strongly clamped to the substrate. In the case of less strong clamped films, part of the stress is released also by crack widening and propagation.By using a sufficient compliant substrate, the often-observed buckle-delamination and embrittlement that is detrimental for the functionality of membranes or sensors is mitigated.