In this paper, we demonstrate that the microstructure and the surface of a thin palladium (Pd) film can be intentionally altered by the presence of a subjacent niobium (Nb) film. Depending on the thickness of the Nb film and on the hydrogen gas pressure, defects in the Pd film can be healed or created. To demonstrate this effect, Pd/Nb/sapphire (Al₂O₃) stacks are studied during hydrogen gas exposure at room temperature by using scanning tunneling microscopy (STM), X-ray diffraction (XRD) and environmental transmission electron microscopy (ETEM). STM shows that hydrogen-induced topography changes in the Nb films depend on the film thickness which affects the height of the Nb surface corrugations, their lateral size and distribution. XRD measurements show that these changes in the Nb hydride film influence the microstructure of the overlaying Pd film. ETEM reveals that the modifications of the Pd film occur due to the precipitation and growth of the Nb hydride phase. The appearance of new defects, interface and surface roughening is observed in the Pd film above locally grown Nb hydride grains. These results can open a new route to design ‘smart’ catalysts or membranes, which may accommodate their microstructure depending on the gaseous environment.