Palladium-silver alloy surfaces with and without adsorbed hydrogen have been studied through density functional theory within the generalized gradient approximations employing a slab representation of the surface. Our calculated lattice constants are in good agreement with experimental data, but we find a substantially lower surface energy for Ag(111) and Pd(111) than experiments. We have calculated adsorption energies of hydrogen on several sites on various alloy surfaces, and found that threefold hollow sites with as many palladium neighbors as possible are preferred. The difference in adsorption energy is so large that we expect trapping of hydrogen around palladium atoms in the surface, possibly resulting in a lower diffusion constant of hydrogen at low coverage on alloy surfaces than on the pure Pd and Ag surfaces. Assuming that the adsorption energy has contributions from geometric ("ensemble") and electronic ("ligand") effects, we found the geometric contribution to dominate. For the geometric contribution it is seen that the binding strength increases as the d-band center moves toward the Fermi level, a result also found by a number of other theoretical studies. However, for the electronic contribution we found that the variation of the adsorption energy as a function of the d-band center was opposite that reported by others: We saw that hydrogen binds less strongly to the surface as the d-band center moves toward the Fermi level. This could possibly be explained by a large variation of the interaction between the metal sp band and hydrogen. (C) 2003 American Institute of Physics.