The interaction of molecular ethylene with the Pd(110) surface has been investigated by means of periodic first-principles density functional theory slab calculations. At 0.5 ML coverage, DFT-GGA-PW91 calculations favor the formation of a short bridge (di-sigma type) adsorption mode over an atop (pi -bonded) ethylene state by 196 meV. On the other hand, HREELS, NEXAFS, and STM measurements unambiguously reveal the presence of pi -bonded ethylene on Pd(110). The possible causes of this wrong site preference in DFT-GGA calculations are discussed.