A combined theoretical and experimental study of lithium palladium deuteride (Li2PdD2) subjected to pressures up to 50 GPa reveals one structural phase transition near 10 GPa, detected by synchrotron powder x-ray diffraction, and metadynamics simulations. The ambient-pressure tetragonal phase of Li2PdD2 transforms into a monoclinic C2/m phase that is distinct from all known structures of alkali metal-transition metal hydrides/deuterides. The structure of the high-pressure phase was characterized using ab initio computational techniques and from refinement of the powder x-ray diffraction data. In the high-pressure phase, the PdD2 complexes lose molecular integrity and are fused to extended [PdD2]∞ chains. The discovered phase transition and new structure are relevant to the possible hydrogen storage application of Li2PdD2 and alkali metal-transition metal hydrides in general.