In summary, the reflective response characteristics of an annealing-restored 30 nm-thick Pd0.92–Y0.08 film have been deter-mined by an intensity-based optical fiber bundle sensor and XRD analyses. The sputter-deposited Pd–Y alloy film shows a poor H absorption and sensitivity to 2% hydrogen after an aging process in air condition at 20◦C for 1 month. By a thermal annealing at 200◦C, a dramatic increase in response/recovery rate of the sensor is observed, and an improvement of about 50% in the response value is also achieved. XRD analyses indicates that crystallinity of the film is improved in the thermal treatment. The intensity of the [1 1 1]peak of Pd has increased 30%, which leads to the average grain sizeof the film grows from 7.809 nm to 7.848 nm. Due to an annealing-induced stress relaxation mechanism of the Pd–Y film, the optical fiber exhibits a much lower drift than the measurements in our previous work under multi-cycle loading/unloading various hydrogen concentration ranging from 2% to 0.1%. The response value of the annealed film complies with an approximate linear relationship to the increase of hydrogen concentration. The experiments demonstrate that Pd–Y film can be stimulated to restore its sensitivity and response rate to hydrogen through a sample annealing process and achieve a better performance in long-term drift. It is a promising material for the fabrication of intensity-based optical sensors applied in fast and stable hydrogen detection.