Stability and electronic properties of small Pd-n clusters (n = 1-5), adsorbed on different types of double vacancy (DV) defect graphene sheets are thoroughly investigated by both density functional theory (DFT) and molecular dynamics (MD). Defect bridge sites of DV(555-777) defect graphene sheet are identified to be the most favorable for Pd-4 cluster adsorption. MD calculations, performed using a canonical ensemble, showed this system to be highly stable up to 800 K. Much better hybridization between C 2p and Pd 4d and 5s orbitals near Fermi level as well as higher charge transfer to graphene sheet was found to be the governing reason for enhanced stability of Pd-4 cluster on DV(555-777) defect site. Comparative analysis of H-2 storage on Pd-4 cluster adsorbed pristine and DV(555-777) defect graphene sheet showed, while adsorption energy/H-2 molecule for both cases lie well within desirable energy window for a hydrogen storage media, the later is much more efficient energetically as distorted in plane sp(2) hybridization reduces the saturations of C-C bonds in the defect regions, making more electron density available for bonding; which leads to higher net charge gain of Pd-4 cluster and higher charge sharing with H-2 molecule. Copyright (c) 2013, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.