The Chemisorption of NO on Pd (111) surface is calculated using Xα-DV method. It's electronic structure, including spectrum of the ground state valence levels, density of states, and the charge transfer between adsorbate and substrate, is obtained. The interaction between adsorbed NO molecules is included in our calculations. The results of DOS are in good agreement with UPS, supporting the LEBD structural analysis, and the adsorption height is determined to be 1.27 ?. Our theoretical results have verified that the interaction between NO is rather important in the chemisorption of NO on Pd surfaces. The activation of adsorbed NO on Pd(lll) is discussed. It is evident from our results that the charge transfer between adsorbed NO and substrate is similar to CO adsorption on transition metal. Finally, we found that the adsorption of NO does not significantly affect the valence band of Pd.