The permeability of hydrogen in thin film Pd-Y composite membranes has been investigated for the first time. Thin (5 µm) Pd-Y films were deposited onto macroporous 316L stainless steel substrates by magnetron sputtering. Prior to deposition, a novel laser melting technique was employed in an attempt to reduce the surface roughness and pore size, thus facilitating the deposition of defect-free films. The active hydrogen transport mechanisms of each layer have been determined and the observed hydrogen permeability was analysed using a series resistance type model. The porous substrate was found to contribute significantly to the total transport resistance, and was the predominant source of the non diffusion limited permeation. After correcting for the substrate effects, the permeability of thin film Pd-Y closely matched that in bulk Pd-Y alloys.