One of the main obstacles confronting the direct synthesis of hydrogen peroxide (H2O2) is how to maintain the unbroken O-O bonding of the intermediate species on the catalytic surface. To address this challenge Pd-Hg alloys have been used with initial reports suggesting their performance offers advantages when compared to monometallic Pd and Pd-Au alloys; however, the interactions of 02 with Pd-Hg alloys are not well characterised. In this study, density functional theory (DFT) calculations, employed to investigate O-2 adsorption on the Pd and Pd-Hg alloy surfaces, suggested O-2 adsorption can occur via either a superoxo or a peroxo pathway and that when Hg is alloyed to Pd there are more surface adsorbed superoxo groups compared to adsorption on a monometallic Pd surface. The Hg in Pd6Hg3/Pd(111) results in an electronic surface structure different to that of Pd(111) and a reduced O-2 adsorption energy. The stronger O-2 surface interactions, when combined with weaker O-O bonding (of the adsorbed O-2), which result from the presence of Hg on the Pd-Hg surface leads to synergistic geometric and electronic effects that result in an increased selectivity during of the synthesis of H2O2.