First-principles calculation reveals that the Ag-Au bulks are energetically favorable with negative heats of formation within the entire composition range, and the Ag-Au interaction has a negligible effect on electronic structures of Ag-Au bulks. Moreover, it is found out that surface segregation of Ag atoms could reduce the work function of Ag-Au surfaces to an extent of about 0.13-0.60 eV, and composition as well as surface state would be fundamental factors in determining surface segregation of the Ag-Au system, which could clarify the controversy regarding surface segregation of Ag-Au in the literature. (C) 2010 Elsevier B.V. All rights reserved.