The　hydrogenation　of　CO　on　Pd　can　lead　to　methane　via　the　Fischer-Tropsch　process　and　methanol　via　oxygenate　synthesis.　Despite　the　fact　that　the　former　is　thermodynamically　favored,　the　catalysis　is　mostly　selective　to　the　latter.　Given　the　importance　of　methanol　synthesis　in　both　industry　applications　and　fundamental　understanding　of　heterogeneous　catalysis,　it　is　highly　desirable　to　understand　the　mechanism　and　selectivity　of　CO　hydrogenation　on　Pd　catalysts.　In　this　work,　this　process　is　studied　on　Pd(111)　using　periodic　plane-wave　density　functional　theory　and　kinetic　Monte　Carlo　simulations.　The　barriers　and　reaction　energies　for　the　methanol　and　methane　formation　are　systematically　explored.　Our　results　suggest　that　methanol　is　formed　via　CO*　-＞　CHO*　-＞　HCOH*　-＞　CH2OH*　-＞　CH3OH*.　The　HCOH*　and　CH2OH*　intermediates,　which　feature　a　C-O　single　bond,　were　found　to　possess　the　lowest　barriers　for　C-O　bond　fission,　but　they　are　still　higher　than　those　in　methanol　formation,　thus　confirming　the　kinetic　origin　of　the　experimentally　observed　selectivity　of　the　Pd　catalysts　toward　methanol.