The optical and resistivity properties of Pd/Co films are investigated and related to the interaction of palladium and the underlying cobalt (Co) clusters layer when exposed to hydrogen. Co is used because it is known to absorb hydrogen only on its surface. Co clusters with mean size of 1.8 nm in the gas phase were deposited on sapphire substrates at room temperature (RT), 300 degrees C, and 500 degrees C respectively, and capped by a continuous Pd film. Light transmission and reflection in the visible range were measured during hydrogen exposure at different pressures in consecutive cycles. An unusual change in the transmittance and the resistance during the first hydrogenation cycle of a sample suggests that a reduction of the surface oxide on the Co clusters layer occurs at room temperature. The reduction of the native oxide on Co thin films or bulk does not happen without the Pd capping when exposed to hydrogen under similar conditions. (C) 2010 Professor T. Nejat Veziroglu. Published by Elsevier Ltd. All rights reserved.