To understand the intriguing magnetic property of the Gd-2 cluster, we performed first-principles electronic structure calculations. A reduced coordination drives the cluster to have different electronic and magnetic properties from its bulk counterpart. The on-site Coulomb interaction, U, is found to be important for the moment enhancement, whereas its magnetic ground state does not change as a function of U. The orbital-decomposed magnetic moments show that 6s and 5d electron contributions become significant. From fully relativistic calculations we found that the effect of spin-orbit coupling on the magnetic moment is not significant and the orbital moment remains small. (C) 2010 Elsevier B.V. All rights reserved.