Wearable electronics have been widely studied to overcome traditional electronic devices which are bulky and rigid. Electronic textiles (e-textiles) are advantageous as they can be used to seamlessly embed electronic devices into clothes. Nevertheless, chemical sensors have not been widely investigated using stretchable conductive fibers despite the usefulness for alerting the users. H2 gas has been researched as an alternative energy source due to many advantages. However, it has a low ignition energy (0.02 mJ) and a wide flammable range (4~75%) which requires detection of H2 gas. In this work, palladium nanoparticle (PdNP) and polymer composite is used for stretchable fiber-type H2 sensor. The fiber is fabricated by simple solution processes. Pd ions are inserted to the outer shell of the polymer fiber due to partial swelling of the polymer, which is later chemically reduced to PdNPs. The fiber is composed with a dense PdNP shell which responds to H2 gas. The sample shows a -27.3% response at 10% H2 and -0.43% response at 5 ppm H2. The sample can detect H2 gas even under 70% strain. Pure Pd has a lattice constant of , but when it is exposed to H2, H atoms are incorporated into the surface of the Pd layer resulting in the formation of semiconducting Pd hydride (PdHx) with a lattice constant of . We confirmed that the PdNP/polymer composite resistance changes under H2 gas using theoretical calculations, and the volume expansion of the composite can close cracks which leads to shorter electrical paths.