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Employing density functional theory simulations, we have predicted Y-decorated Ψ-graphene as a potential hydrogen storage material for fuel cell vehicle (FCV) applications. The system is stable at ambient and higher temperatures as substantiated by ab initio molecular dynamics simulations and is capable of holding 8.31 wt. % of hydrogen, higher than the U.S. Department of Energy (DOE) target. Each Y atom attached on Ψ-graphene can adsorb seven H2 molecules with a mean binding energy of −0.39 eV per H2 and a desorption temperature of 496.55 K—highly suitable for fuel cell applications. The Y atom binds strongly with the Ψ-graphene sheet, evident from the binding energy of −3.06 eV. The presence of a diffusion energy barrier of 0.4–0.7 eV for the diffusion of Y atom across Ψ-graphene may prevent metal–metal clustering. The flow of charge is found to be from Y atom 4d orbitals toward the C 2p orbitals of Ψ-graphene. Hydrogen molecules are found to bind reversibly by Kubas interactions involving charge donation and back donation between Y atom 4d orbitals and 1s orbitals of hydrogen, allowing for a suitable binding energy for FCV applications. Considering the stability of the system, optimum binding energy, and desorption temperature as per U.S. DOE targets; adequate barrier energy for diffusion; and excellent gravimetric hydrogen storage capability of the material, we propose Y-decorated Ψ-graphene as a potent hydrogen storage material for FCV applications.