The ground state potential energy surface for CO chemisorption across Pd{110} has been calculated using density functional theory with gradient corrections at monolayer coverage. The most stable site corresponds well with the experimental adsorption heat, and it is found that the strength of binding to sites is in the following order: pseudo-short-bridge>atop>long-bridge>hollow. Pathways and transition states for CO surface diffusion, involving a correlation between translation and orientation, are proposed and discussed. (C) 1997 American Institute of Physics.