Embedded cluster model calculations based on density functional theory have been used to study the adsorption of NO on MgO surface. The calculation results indicate that at ideal terrace sites on MgO(100) surface, NO is weakly adsorbed as NO and cis-N2O2, whereas at step and corner sites NO could be adsorbed as (a) NO adspecies with N-end bridging over the step-sitting Mg-XC-O-YC (X,Y = 3,4) ion pairs, (b) NO22- adspecies with the O-N bond of the adsorbed NO molecule chaining over the step-sitting Mg-XC-O-YC (X,Y = 3,4) ion pairs, and (c) N2O32- adspecies by attacking another NO molecule onto the NO22- adspecies. The latter species could be regarded as an intermediate for NO decomposition over MgO catalyst. The calculated IR frequencies of the weakly adsorbed Cis-N2O2 species and the chemisorption-induced NO22- and N2O32- surface species agree well with those from the IR experiments. On the basis of the calculated energetics, a possible mechanism of NO decomposition reaction has been proposed.