The characteristics of MgO layer deposited under hydrogen atmosphere were investigated. Hydrogen gas was introduced during e-beam evaporation coating process of MgO layer and its effects on microstructure, cathode luminescence spectra, discharge voltages and effective yield of secondary electron emission were examined. The results indicated that the hydrogen influences the concentration and energy levels of defects in MgO layer, which in turn affects the luminance efficiency and discharge delays of the panels significantly.