Using a combination of TEM and XPS, we made an analysis of the complex high-temperature annealing effect on ultrathin titanium deuteride (TiDy) films evaporated on a Si(100) substrate and covered by an ultrathin palladium layer. Both the preparation and annealing of the TiDy/Pd bi-layer films were performed in situ under UHV conditions. It was found that the surface and bulk morphology of the bi-layer film as well as that of the Si substrate material undergo a microstructural and chemical conversion after annealing and annealing-induced deuterium evolution from the TiDy phase. Energy-filtered TEM (EFTEM) mapping of cross-section images and argon ion sputter depth profiling XPS analysis revealed both a broad intermixing between the Ti and Pd layers and an extensive inter-diffusion of Si from the substrate into the film bulk area. Segregation of Ti at the Pd top layer surface was found to occur by means of angle-resolved XPS (ARXPS) and the EFTEM analyses. Selected area diffraction (SAD) and XPS provided evidence for the formation of a new PdTi2 bimetallic phase within the top region of the annealed film. Moreover, these techniques allowed to detect the initial stages of TiSi phase formation within the film–substrate interlayer.