Palladium nanoparticles display fascinating electronic, optical and catalytic properties, thus they can be used for various applications such as sensor fabrication. Conducting polymers such as polyaniline have also been widely used in sensor technology due to its cost effectiveness, versatility, and ease of synthesis. In this research, attention was given to unify the exceptional properties of these two materials and construct palladium nanoparticle coated polyaniline films to detect hydrogen and moisture. Electrochemical polymerization of aniline was carried out on gold sputtered epoxy resin boards. Polyaniline film was generated across a gap of 0.2 mm created by a scratch made on the gold coating prior to electrochemical polymerization. A palladium nanoparticle dispersion was prepared using sonochemical reduction method and coated on to polyaniline film using drop-drying technique. Polyaniline only films were also fabricated for comparative analysis. Sensitivity of films towards humidity and hydrogen was evaluated using impedance spectroscopy in the presence of the respective species. According to the results, polyaniline films exhibited an impedance drop in the presence of humidity and the response was significantly improved once palladium nanoparticles were incorporated. Interestingly, polyaniline only films did not respond to hydrogen. Nevertheless, palladium nanoparticle coated polyaniline films exhibited remarkable response towards hydrogen.