The control of stress build-up during manufacturing is crucial for the performance and reliability of microelectronic devices. A widely used building block of these devices are silicide layers. The as-grown silicide interlayer represents a lower limit for the ongoing trend of device miniaturization. However, understanding its temporal formation during thin film deposition remains challenging. Here, we demonstrate that the combination of synchrotronbased and complementary real-time diagnostics during growth of Pd on Si provides valuable insight into the kinetics of phase transformation and the interplay between interfacial reaction, texture formation and stress build-up at the nanoscale.