Palladium composite membranes were prepared on stainless steel (SUS) supports modified by nickel submicron powder and colloidal silica sols. Permeation tests of the palladium composite membranes were carried out at high temperature in order to observe the thermal stability of the membrane. The palladium composite membrane failed with formation of plenty of pinholes in the presence of hydrogen at high temperature. The failure of the composite membrane was verified by comparing the nitrogen permeance before hydrogen permeation test with that after hydrogen permeation test and comparing the H-2/N-2 selectivity for single gas permeation test with that for mixture gas permeation test. The variation of the membrane surface due to the failure of the membrane was characterized in scanning electron microscopy (SEM) and energy dispersive X-ray spectrometer (EDS) analyses. As a result, it can be concluded that reducible metal oxides can be attributed to the failure of the composite membranes resulting from reduction of the metal oxides by hydrogen whichever position in the membrane the metal oxides are layered.