The bimetallic Cu-1@Pd-3(111) catalyst has been synthesized recently and exhibits better catalytic activity and durability compared with pure Pd(111) as anode catalyst in direct formic acid fuel cells (DFAFCs). In this work, we studied the reaction mechanism of formic acid dissociation on both Pd(111) and Cu-1@Pd-3(111) by using the density functional method. Our calculations showed that the surface adsorption of the poisoning species CO on Cu-1@Pd-3(111) is weakened mainly by the strain effect rather than the Cu-Pd ligand effect. The Cu-1@Pd-3(111) can effectively promote the catalytic activity for formic acid dissociation by decreasing the barrier of CO2 formation from the preferential trans-COOH intermediate and increasing the barrier of CO formation from the reduction of CO2. We found that the H atom accumulation, electron accumulation and low electrode potential could accelerate the catalyst deactivation due to the contamination of the poisoning species CO. Furthermore, under low anode potential, the Cu-1@Pd-3(111) has better durability than pure Pd(111), which can be attributed to the unfavorable CO formation and the favorable CO desorption. (C) 2016 Elsevier B.V. All rights reserved.