One class of material that is of significant interest, called hybrid materials, are defined by a particle size in the nanometer to molecular regime. Such small particles often give rise to novel properties that are not seen in the uncombined constituents. Previous efforts to characterize the particle shape, size and assemblies of palladium nanoparticles grown in a poly(2-vinylpyridine) matrix through the reduction of Pd(acac)2 utilizing benzyl alcohol as a reduction agent, has revealed that these properties can be controlled with surprising ease. Additionally, the particle size was shown to be predominantly mono-disperse, with a diameter of ~5 nm, a size that is typically difficult to disperse into polymeric materials due to the entropically favorable conformation being aggregated particles. Recent efforts have focused on understanding the atomic scale evolution of the palladium particles as they grow and to correlate the changes to those of particle size. To undertake these measurements in-situ small and wide angle x-ray scattering (SWAXS) was utilized. Two dimensional correlation analysis was applied to the SWAXS data, which quantitatively resolved the structural evolution of the Pd phase. It was found that the particle diameter grew before measurable atomic-scale ordering could be observed and furthermore the initial atomic ordering did not correspond to the predicted face center cubic (FCC) structure. Instead, a mostly disordered phase, we denote as the mesophase, formed first. This initial growth was followed by the appearance of peaks with the characteristic ordering of an FCC structure, albeit with a significant number of defects. The origin of this surprising result is still speculated, and is part of our on-going investigations. Although, it appears clear that the low temperature and possibly the polymer matrix play a role in modulating the free energy minimizing structure formed during reduction.