Adsorption of acetylene on Si(100) is studied from first principles. We find that, among a number of possible adsorption configurations, the lowest-energy structure is a "bridge" configuration, where the C2H2 molecule is bonded to two Si atoms. Instead, "pedestal" configurations, recently proposed as the lowest-energy structures, are found to be much higher in energy and, therefore, can represent only metastable adsorption sites. We have calculated the surface formation energies for two different saturation coverages, namely 0.5 and 1 monolayer, both observed in experiments. We find that although, in general, the full monolayer coverage is favored, a narrow range of temperatures exists in which the 0.5 monolayer coverage is the most stable one, where the acetylene molecules are adsorbed in a 2x2 structure. This result disagrees with the conclusions of a recent study and represents a possible explanation of apparently controversial experimental findings. The crucial role played by the use of a gradient-corrected density functional is discussed. Finally, we study thermal decomposition of acetylene adsorbed on Si(100) by means of finite-temperature molecular dynamics, and we observe an unexpected behavior of dehydrogenated acetylene molecules.