By means of extended Huckel calculations, the electronic properties of the (111) and (100) surface Pd atoms of the Pd3Mn alloy are compared with those of pure Pd. An electron transfer occurs from Mn to Pd, resulting in an increased electron density on the surface Pd atom whatever Mn is present in the first or the second layer. The study of CO and NO adsorption shows for both molecules a decrease in the binding energy on the alloy surfaces compared with the pure metal surfaces, The N-O overlap population is found to be much smaller on the alloy, which means that the N-O bond is weaker and hence that NO dissociates more easily than on pure Pd. Moreover, the bent form of NO is found to be preferred in most cases on the alloy, which is even more favourable for NO dissociation. Therefore, these results explain why the alloying of Pd with Mn enhances the catalytic behaviour of Pd for the CO+NO reaction if NO dissociation is the determining step. (C) 1998 Elsevier Science B.V.