FeTi is considered a good material for solid state hydrogen storage; however, it must undergo an initial activation by either a vacuum or hydrogen annealing procedure after preparation or exposure to air. Previous studies indicate that the initial activation in vacuum causes a reduction of surface iron oxides by a solid state reaction with FeTi to produce TiO₂. Palladium has also been shown to be an effective barrier for eliminating O₂ or H₂ impurities in typical H₂ charging gases from reaching active FeTi. These impurities cause FeTi decomposition to iron and TiO₂. In this study, experiments have been performed to investigate interfacial reactions that occur between Fe₂O₃ and FeTi layers located below protective palladium overlayers. Vacuum annealing procedures were found to crack the palladium overlayer while forming both iron and titanium oxides below the surface. Hydrogen annealing procedures allowed reduction of the subsurface Fe₂O₃ by FeTi without evidence of cracking within the palladium overlayer. Both procedures produced Fe-Pd alloys, the latter procedure also forming Fe-Pd hydrides at >or=623 K. Results indicate that the application of palladium overlayers on FeTi may be successfully used provide the initial activation is performed in hydrogen environments.