We report the observation and manipulation of hydrogen atoms beneath the surface of a Pd[111] crystal by using low-temperature scanning tunneling microscopy. These subsurface hydride sites have been postulated to have critical roles in hydrogen storage, metal embrittlement, fuel cells, and catalytic reactions, but they have been neither observed directly nor selectively populated previously. We demonstrate that the subsurface region of Pd can be populated with hydrogen atoms from the bulk by applying voltage pulses from a scanning tunneling microscope tip. This phenomenon is explained with an inelastic excitation mechanism, whereby hydrogen atoms in the bulk are excited by tunneling electrons and are promoted to more stable sites in the subsurface region. We show that this selectively placed subsurface hydride affects the electronic, geometric, and chemical properties of the surface. Specifically, we observed the effects of hydride formation on surface deformation and charge and on adsorbed hydrogen on the surface. Hydrogen segregation and overlayer vacancy ordering on the Pd[111] have been characterized and explained in terms of the surface changes attributable to selective hydrogen occupation of subsurface hydride sites in Pd[111].