The elementary steps leading to the formation of HCOO and CO via CO2 hydrogenation, two important intermediates contributing to methanol and methane formation, respectively, have been explored to identify hydroxylation effect of the oxide support on the selectivity in CO2 hydrogenation on Pd/-gamma-Al2O3 catalyst by the density functional theory together with slab model calculations. Two models: tetramer Pd4 cluster supported on the dry gamma-Al2O3(1 1 0) surface, D(Pd4), and on the hydroxylated gamma-Al2O3(1 1 0) surface, H(Pd4), have been employed to model Pd/gamma-Al2O3 catalyst. Meanwhile, Pd(1 1 1) surface is used to model the unsupported large Pd particle sizes. On D(Pd4), the formation of CO is preferred both kinetically and thermodynamically. On H(Pd4), HCOO formation becomes more favorable kinetically while CO formation is more facile thermodynamically. However, Pd(1 1 1) surface has not shown strong selectivity and activity for CO2 hydrogenation to HCOO or CO. These results show that varying the properties of gamma-Al2O3 support can alter the selectivity of CO2 hydrogenation, moreover, the presence and number of low-coordinated Pd particles is of great importance to improve the overall activity and selectivity of CO2 hydrogenation. Our results also show that to achieve high selectivity of CO2 hydrogenation, Pd/gamma-Al2O3 catalyst has to get help from additives, which should be able to improve its dispersion or to control the hydroxylation. The present study provides the basis and one of the directions to the design of improved catalysts in CO2 hydrogenation for methanol, methane and other products. (c) 2012 Elsevier B.V. All rights reserved.