The mechanisms of methanol (CH3OH) oxidation on the PtPd(111) alloy surface were systematically investigated by using density functional theory calculations. The energies of all the involved species were analyzed. The results indicated that with the removal of H atoms from adsorbates on PtPd(111) surface, the adsorption energies of (i) CH3OH, CH2OH, CHOH, and COH increased linearly, while those of (ii) CH3OH, CH3O, CH2O, CHO, and CO exhibited odd‐even oscillation. On PtPd(111) surface, CH3OH underwent the preferred initial CH bond scission followed by successive dehydrogenation and then CHO oxidation, that is, CH3OH → CH2OH → CHOH → CHO → CHOOH → COOH → CO2. Importantly, the rate‐determining step of CH3OH oxidation was found to switch from CO → CO2 on Pt(111) to COOH → CO2 + H on PtPd(111) with a lower energy barrier of 0.96 eV. Moreover, water also decomposed into OH more easily on PtPd(111) than on Pt(111). The calculated results indicate that alloying Pt with Pd could efficiently improve its catalytic performance for CH3OH oxidation through altering the primary pathways from the CO path on pure Pt to the non‐CO path on PtPd(111).