In situ x-ray-diffraction studies of the hydriding behavior of coarse-grained and nanocrystalline palladium samples at ambient temperature are descibed. A previously observed narrowing of the miscibility gap in nanocrystalline palladium was reproduced. The present results, however, demonstrate that this change in the palladium-hydrogen phase diagram for nanocrystalline material is not related to an inability to form the hydride phase in highly disordered grain boundary regions as previously proposed. Instead, the entire volume of nanocrystalline samples was observed to transform to [beta]-PdH upon exposure to hydrogen. This behavior indicates that the entropy and/or enthalpy of mixing for the palladium-hydrogen system differs in nanocrystalline and coarse-grained materials. Because of these changes in thermodynamic quantities, the phase boundary of the palladium-hydrogen miscibility gap is predicted to be shifted to lower temperatures for nanocrystalline samples.