Palladium absorbs large volumetric quantities of hydrogen at room temperature and ambient pressure, making the palladium hydride system a promising candidate for hydrogen storage. Here, we use Bragg coherent diffraction imaging to map the strain associated with defects in three dimensions before and during the hydride phase transformation of an individual octahedral palladium nanoparticle, synthesized using a seed-mediated approach. The displacement distribution imaging unveils the location of the seed nanoparticle in the final nanocrystal. By comparing our experimental results with a finite-element model, we verify that the seed nanoparticle causes a characteristic displacement distribution of the larger nanocrystal. During the hydrogen exposure, the hydride phase is predominantly formed on one tip of the octahedra, where there is a high number of lower coordinated Pd atoms. Our experimental and theoretical results provide an unambiguous method for future structure optimization of seed-mediated nanoparticle growth and in the design of palladium-based hydrogen storage systems.