This study involves monitoring the interface evolution with increasing annealing temperatures in a Cu-Pd bimetal layer structure. The changes due to interdiffusion and ensuing charge transfer are monitored by extensive X-ray photoelectron spectroscopy (XPS) and glancing angle X-ray diffraction (GAXRD) studies. The Pd and Cu core level fingerprinting and change in lattice parameter provide evidence for alloy formation. The changes in the valence band features indicate the formation of new states that are different from the density of states of individual metal surfaces. The study demonstrates the possibility of tuning interface properties by alloy formation that may have specific applications in catalysis, hydrogen sensing and storage. (c) 2007 Published by Elsevier B.V.