The properties of Ag-Li alloy films on Ru(001) have been investigated using TDS, XPS, XAES, and UPS. For equiatomic AgLi alloys, thermal decomposition starts at similar to 600 K. In the decomposition process of the silver lithium alloys, Ag-Li bonds are replaced by Ag-Ag bonds and the alkali metal segregates to the surface of the film before desorbing (600-950 K), with Ag remaining on top of the Ru substrate. Results of valence-band photoemission and XAES for silver lithium alloys and ab initio HF-SCF calculations for the diatomic AgLi molecule indicate that the charge transfer within the Ag-Li bond is small (Ag-delta--Li-delta+, delta < 0.4 e). In the alloys, the Ag-Li bond is best described as mostly metallic with a small degree of ionic character. This type of bonding does not have a major effect on the electron-donor properties of Li, and the element remains extremely reactive toward O-2 and CO. The interaction of O-2 with AgLi at 80 K produces O2- (the only oxygen ion at low O-2 exposures) and O-2(2-). The oxygen species break the Ag-Li bonds to form lithium oxides and very small Ag clusters that are dispersed within the film. Annealing to 800 K leads to sintering of these Ag clusters into large three-dimensional particles. At 80 K, silver-lithium alloys adsorb significant amounts of CO to form Li2O, LixCy, and Li-m(CO)(n) complexes that are stable up to temperatures above 300 K.