Hydrogen absorption in face-centered-cubic palladium is studied from first principles, with particular focus on interaction between hydrogen atoms and vacancies, formation of hydrogen-vacancy complexes, and multiple hydrogen occupancy of a Pd vacancy. Vacancy formation energy in the presence of hydrogen, hydrogen trapping energy, and vacancy formation volume have been calculated and compared to existing experimental data. We show that a vacancy and hydrogen atoms form stable complexes. Further we have studied the process of hydrogen diffusion into the Pd vacancy. We find the energetically preferable position for hydrogen to reside in the palladium unit cell in the presence of a vacancy. The possibility of the multiple hydrogen occupancy ͑up to six hydrogen atoms͒ of a monovacancy is elucidated. This theoretical finding supports experimental indication of the appearance of superabundant vacancy complexes in palladium in the presence of hydrogen.