The advancement of microreactor technology is crucial for providing portable electricity, essential for both human space exploration and remote terrestrial regions. Miniaturizing nuclear reactors presents new challenges for materials science, particularly in controlling nuclear reactions through neutron thermalization in compact geometries. Transition metal hydrides, renowned for their robust nuclear moderation capability, are currently under development to meet this challenge. However, research on their response to irradiation remains limited, especially regarding phase stability, hydrogen retention, and irradiation temperature and dose dependence. Our study investigates the irradiation response of yttrium dihydride (YH2), a promising moderator material due to its high operational temperature. Through a combination of experimental techniques, we find that YH2 remains stable up to an irradiation dose of 2 dpa and below 800°C, identified as a critical temperature. Notably, we observe the nucleation and growth of voids as a predominant form of radiation damage in YH2 microstructures, distinguishable from pre-existing defects. Below the critical temperature, no phase transformations, degassing, precipitation, or amorphization are observed. Our findings, supported by ion beam and neutron scattering techniques along with density functional theory calculations, suggest strategies to enhance metal hydride performance in extreme environments. This study addresses current challenges in hydrogen-materials technology, aiming to advance metallurgy, nuclear engineering, and space technology for future human-based space missions and extraterrestrial settlement.