We study the dynamics of transient hot H atoms on Pd(100) that originated from dissociative adsorption of H2. The methodology developed here, denoted AIMDEF, consists of ab initio molecular dynamics simulations that include a friction force to account for the energy transfer to the electronic system. We find that the excitation of electron-hole pairs is the main channel for energy dissipation, which happens at a rate that is five times faster than energy transfer into Pd lattice motion. Our results show that electronic excitations may constitute the dominant dissipation channel in the relaxation of hot atoms on surfaces.