The possible geometrical and electronic structures of small Pd-Y clusters including Pdn(n=2,3,4),Yn(n=2,3,4), PdYn(n=2,3, 4), PdnY(n=1,2,3,4) and Pd2Yn(n=2,3,4) have been optimized by density functional theory method with a relativistic effective core potentia l(RECP) using Gaussian 98 code. Due to the Jahn-Teller effect, the ground states of Pd4 and Y4 belong to Cs, while the symmetry is C2v for P d3 and Y3. The ground states of Pd3Y, Pd4Y, PdY3,PdY4 and Pd2Y4b elong to Cs. Finally, the energy level distribution, highest occupied mole cular orbit-lowest unoccupied molecular orbit gaps and the chemical activation a re investigated.