The process of hydrogen spillover on metal nanoparticle decorated carbon surfaces has been discussed for many years due to its importance for heterogeneous catalysis and hydrogen storage. The present density functional theory (DFT) study supports recent experimental observations of the hydrogen spillover process. By use of model systems of carbon-supported palladium nanoparticles, the details of hydrogen spillover are investigated and the effects of nitrogen doping on such processes are elucidated. It is found that graphitic nitrogen atoms and water molecules significantly facilitate the hydrogen spillover reaction and serve as anchoring sites for the spillover hydrogen atoms.