We investigated the relationship between orbital interactions and binding energy in Pd-13 Ni-x(x) (x = 1-13) nanoalloys. We employed, DFT at DNP/(PW91, BLYP, PBE and VWN-BP) level of functionals. In spite of higher cohesive energy of Ni as compared to Pd the thermodynamic stability of similar to 70-80% Ni substituted Pd-13 cluster is higher than Ni-13. Orbital interactions are analyzed using partial density of states to elucidate the underlying reasons. In the overall stability of these clusters, the interaction between Ni (4s, 3p) and Pd (4s, 4p) orbitals are crucial for the explanation of subtle changes in their stabilities. This study provides a new orbital picture for thermodynamic stability in transition metal nanoalloys. (C) 2011 Elsevier B.V. All rights reserved.