Based on first-principles calculations, structure optimization of Pd intercalated graphite is performed and the equilibrium values for lattice constants are obtained, in agreement with experimental values. In graphite the carbon atoms within the basal plane are bound together by strong covalent sigma-bonds, while atoms in adjacent layers are weakly bound by Van der Waals bonds, results in semimetal. Bring intercalated with Pd, due to Pd-4d and C-2p hybridizations, partial charge transfers occur from Pd to C, which increase the density of states at Fermi level and make the compound metallic-like; the heat of formation is found to be 2.45eV for per Pd atom intercalation.