The selective hydrogenation of acetylene to ethylene on several Pd surfaces (Pd(111), Pd(100), Pd(211), and Pd(211)-defect) and Pd surfaces with subsurface species (carbon and hydrogen) as well as a number of Pd-based alloys (Pd-M/Pd(111) and Pd-M/Pd(211) (M = Cu, Ag and Au)) are investigated using density functional theory calculations to understand both the acetylene hydrogenation activity and the selectivity of ethylene formation. All the hydrogenation barriers are calculated, and the reaction rates on these surfaces are obtained using a two-step model. Pd(211) is found to have the highest activity for acetylene hydrogenation while Pd(100) gives rise to the lowest activity. In addition, more open surfaces result in over-hydrogenation to form ethane, while the close-packed surface (Pd(111)) is the most selective. However, we also find that the presence of subsurface carbon and hydrogen significantly changes the reactivity and selectivity of acetylene toward hydrogenation on Pd surfaces. On forming surface alloys of Pd with Cu, Ag and Au, the selectivity for ethylene is also found to be changed. A new energy decomposition method is used to quantitatively analyze the factors in determining the changes in selectivity. These surface modifiers are found to block low coordination unselective sites, leading to a decreased ethane production. (C) 2013 The Authors. Published by Elsevier Inc. All rights reserved.