Metal hydride systems are an important research topic in materials science because of their many practical, industrial, and scientific applications. Therefore, the development of reliable and efficient interatomic potentials for metal hydrides systems, to be utilized in molecular simulations, can be of great value in accelerating the research in this field. In this research, fully analytical interatomic Embedded Atom Method (EAM) potentials are developed for the PdAgH system. Ab initio simulations were performed to obtain the properties of selected PdAgH structures for fitting. The potentials are fit utilizing the central atom method without employing time-consuming molecular dynamics simulations in the fitting procedure. The new PdAgH potential extends a PdH model with fewer fitting parameters than previously developed EAM models for the hydride systems that can better predict the cohesive energy, lattice constant, bulk modulus, elastic constants, and the stable alloy crystal structures during molecular dynamics (MD) simulations for PdH over a wide range of hydrogen concentrations. MD simulation with the new PdAgH potential shows that the lattice constants and cohesive energies are in good agreement with the results from ab initio simulations for much of the hydrogen composition range. Simulations show that H atoms within the PdAg fcc structure move from tetrahedral positions to lower energy octahedral positions as predicted by the DFT results and previous works. Additionally, the elastic constants follow trends comparable to previous work and DFT calculations. Extension of the model to PdCuH and many other alloy combinations can now be easily accomplished building on this work.