Polycrystalline palladium (Pd) was deposited on micro-porous stainless steel (MPSS) substrate using a suitable surfactant of various concentrations in the electroless plating process. The micro-structural characterization was carried out using Scanning Electron Microscopy (SEM), Energy Dispersive Spectroscopy (EDS), and X-ray diffraction (XRD). The concentrations of the surfactant were chosen as a function of critical micelle concentration (CMC) in order to elucidate the interaction of the surfactant in solid-liquid and solid-gas interface during grain coarsening. It appears that during electro-crystallization, the driving force between the newly formed crystallite and the originally coarsed grains depends on the relative size and crystalline configuration of the newly formed crystallite. This crystallite on the other hand is affected by the localized over potential, the presence of active nucleating particles, and the texture of MPSS surface and operating conditions. The size of the newly formed grain is smaller when the concentration of the surface-active agents is relatively higher. It suggests that the surfactant active polar group inherently participates in the reaction/deposition process and effectively activates the process of grain nucleation and agglomeration in electro-crystallization. The membranes of different grain sizes were fabricated in the presence of the cationic surfactant DTAB (dodecyltrimethyiammonium bromide) of various concentrations. DTAB concentration is expressed in critical micelle concentration (CM), which ranged from CMCx1/2 to CMCx4. Fabricated membranes of different grain size and distribution were also studied for hydrogen permeability and selectivity. Results show that membranes with agglomerated grains (higher grain size) possess relatively higher permeability and selectivity.