The methods of structural characterization of metal and chemical hydrides are reviewed. The existing difficulties and problems are outlined and possible solutions presented. It is shown that powder diffraction, and especially the Direct Space Method, is essential component of hydride research. Crystal structures containing as many as 55 independent atoms (including hydrogen) have been fully characterized using powder diffraction. This is of great importance, because rapid collection of powder data thanks to modem synchrotron and neutron time-of-flight sources opens the possibility for fast in-situ studies, mapping of phase transitions induced by the temperature, pressure, hydrogen content, and chemical reactions. The progress in structural characterization of hydrides goes hand in hand with the progress in the powder diffraction methodology.