A two-step process consisting of an initial nucleation stage with hydrogen followed by a growth stage without hydrogen is used to examine the role of hydrogen in ultrananocrystalline diamond deposition in Ar-rich microwave plasmas. An addition of 5% of H2 to Ar-rich/CH4 in the initial stage increases the nucleation density (up to 109 cm-2) and the mean grain size (around 10 nm), accompanied by some improvement of crystallinity. However, an addition of H2 above 10% suppresses nucleation by the etching of nucleation sites. The introduction of hydrogen atoms promotes the termination and stabilization of diamond grain surfaces toward sp3 configuration, which are responsible for enhancing nucleation and crystallization. In contrast, Ar promotes renucleation by increasing the production of C2 radicals in the plasma, which causes the degradation of the stabilization on the growing surfaces.