YMgNi4-based alloys exhibit reversible hydrogen absorption and desorption reactions at near room temperature. Here, we report that Co-substituted YMgNi4-based alloys exhibited higher hydrogen contents and lower hydrogen absorption and desorption reaction pressures than unsubstituted alloys. The effects of Co-substitution viewed from atomic arrangements were particularly clarified by synchrotron radiation powder X-ray diffraction, neutron diffraction, and inelastic neutron scattering. Powder neutron diffraction of the Co-substituted alloy at 5 MPa of D-2 pressure suggested the formation of gamma-phase deuteride (higher deuterium content) from beta-phase deuteride (lower deuterium content). However, no gamma-phase deuteride was observed in the unsubstituted alloys at 5 MPa. Therefore, the gamma-phase deuteride formation of the Co-substituted alloy at lower pressure led to higher hydrogen contents than the unsubstituted alloys. The combined results of powder neutron diffraction and inelastic neutron scattering suggested that the gamma-phase hydride of the Co-substituted alloy was continuously generated due to additional H atoms at the H atom sites in the beta-phase hydride because of the disordered H atomic arrangement involving H-H interactions. As a result, hydrogen absorption and desorption reaction pressures for the gamma-phase deuteride formation with higher hydrogen storage capacity were lowered.