In this review paper, we provide an overview of state-of-the-art Pd-based materials for optical H2 sensors. The first part of the manuscript introduces the operating principles, providing background information on the thermodynamics and the primary mechanisms of optical detection. Optical H2 sensors using thin films (i.e., films without any nanostructuring) are discussed first, followed by those employing nanostructured materials based on aggregated or isolated nanoparticles (ANPs and INPs, respectively), as well as complex nanostructured (CN) architectures. The different material types are discussed on the basis of the properties they can attribute to the resulting sensors, including their limit of detection, sensitivity, and response time. Limitations induced by cracking and the hysteresis effect, which reduce the repeatability and reliability of the sensors, as well as by CO poisoning that deteriorates their performance in the long run, are also discussed together with an overview of manufacturing approaches (e.g., tailoring the composition and/or applying functionalizing coatings) for addressing these issues.