Pd-Cu composite membranes on microporous stainless steel (MPSS) substrate were fabricated using surfactant induced electroless plating (SIEP). In the SIEP method, dodecyl trimethyl ammonium bromide (DTAB), a cationic surfactant, was used in Pd- and Cu-baths for the sequential deposition of metals on MPSS substrates. The SIEP Pd-Cu membrane performance was compared with membranes fabricated by conventional electroless plating (CEP). The pre- and post-annealing characterizations of these membranes were carried out by SEM, XRD, EDX and AFM studies. The SEM images showed a significant improvement of the membrane surface morphology, in terms of metal grain structures and grain agglomeration compared to the CEP membranes. The SEM images and helium gas-tightness studies indicated that dense and thinner films of Pd-Cu can be produced with shorter deposition time using SIEP method. From XRD, cross-sectional SEM and EDS studies, alloying of Pd-Cu was confirmed at an annealing temperature of 773 K under hydrogen environment. These membranes were also studied for H-2 perm-selectivity as a function of temperature and feed pressure. SIEP membranes had significantly higher H-2 perm-selectivity compared to CEP membranes. Under thermal cycling (573 K 873 K 573 K), the SIEP Pd-Cu membrane was stable and retained hydrogen permeation characteristics for over three months of operation. Copyright (C) 2011, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.