Nonlocal density-functional and correlated ab initio methods have been used to compute singlet–triplet separations for the Pd atom and Pd2, as well as the dissociation energies of the latter in its ground and first excited states. The results are in good agreement with the available experimental data and with other high-level calculations. Single-point local density-functional computations were carried out for Pd clusters up to Pd22 (1012 electrons). The interaction energy per PdPd bond appears to be approaching a limiting value for Pd22. © 1993 John Wiley & Sons, Inc.