The compound CeIrAl crystallizes in the orthorhombic ε-TiNiSi-type structure in which the cerium ions are in a mixed-valent state as inferred from its weakly temperature dependent magnetic susceptibility. This compound absorbs hydrogen at ambient temperature to form CeIrAlH2. A structural transformation from orthorhombic to hexagonal structure takes place on hydrogen absorption. Further, the magnetic susceptibility of the hydride exhibits Curie-Weiss behavior, typical of local moment on Ce3+ ions. Thus hydrogen absorption brings about dramatic changes in the structure and the valence state of cerium in CeIrAl.