The nanoparticles (NP), consisting of hydrazine grafted organo-silica with PdNPs embedded shell on the Fe3O4 core, were prepared to study the adsorption and interactions of hydrogen in PdNPs and their support matrix. This material is expected to find the applications in the hydrogen technology including catalysis. The PdNPs were formed spontaneously in the organo-silica shell on magnetite nanoparticles by the reduction of Pd2+ ions with grafted hydrazine in the organo-silica shell. Thus formed NPs, termed as Fe3O4-GTEOS@PdNPs, were also thermally treated at 1033 K in Ar atmosphere to convert organic components to carbon. The chemical composition, physical structure, and magnetic properties were studied by high resolution transmission electron microscopy, X-rays diffraction, Mössbauer spectroscopy and X-ray photoelectron spectroscopy for the characterizations of physical, chemical and magnetic changes occurred in the Fe3O4-GTEOS@PdNPs after hydrogen adsorption-desorption at varying temperatures with respect to that in unused one. The hydrogen adsorption pressure-composition (PC) isotherms in Fe3O4-GTEOS@PdNPs followed the expected trend from 173 to 303 K as expected from PdNPs. However, thermally treated Fe3O4-GTEOS@PdNPs were found to adsorb lower amount of hydrogen due to oxidation of Pd0 to PdO and morphological changes during heating in Ar atmosphere. The comparison of nH/nPd value (0.49) obtained for the PdNPs in Fe3O4-GTEOS@PdNPs with the values those reported in the literature for different Pd materials showed the decrease in nH/nPd value with decrease in the size of Pd particles. This was attributed to stronger Pd–H bond in a nanoscale palladium, which prevented hydrogen transfer to interior matrix as compared to bigger Pd particles. The hydrogen adsorption PC isotherm at 373 K in Fe3O4-GTEOS@PdNPs could not be obtained as the unknown chemical reaction happened in the sample during the experiment. The considerably higher H2 consumption in the Fe3O4-GTEOS@PdNPs occurred at 373 K than that expected from the hydrogen adsorption in the PdNPs alone.