The defect chemistry and fluorine insertion properties of the new Ba2-xSrxPdO2F2 system have been investigated using atomistic simulation techniques. The interatomic potential model produces good agreement between simulated and observed structures for the "parent" oxides Ba2PdO3 and Sr2PdO3, and the oxide-fluorides Ba2PdO2F2 and BaSrPdO2F2. The perfect lattice simulations confirm the most favourable structure type is the T' (Nd2CuO4) structure for the oxide-fluoride phases comprised of square planar Pd, which accords with recent EXAFS studies. The fluorination reaction in the precursor oxide Ba2PdO3, involving substitution of two fluorine ions for one oxygen ion, is highly favourable. The formation of fluorine interstitials and holes in Ba2PdO2F2 is an unfavourable process in accord with the observed resistance to excess fluorine, and in contrast to the related cuprate superconductor Sr(2)CuO(2)F(2+)delta.