Density functional theory (DFT)-based calculations have been performed so as to study the interaction of elemental mercury (Hg) with small neutral, cationic and anionic palladium clusters (Pd n , n = 1-6). Results of these calculations clearly indicate that frontier molecular orbital (FMO) theory is a useful method to predict the selectivity of Hg adsorption. Binding energies of Hg on cationic Pd n clusters are generally found to be greater than those on neutral and anionic clusters. Results of natural bond orbital (NBO) analysis show that the flow of electrons in the neutral and charged complexes is mainly due to s orbitals of Hg. NBO analysis also indicates that, in most of the cases, the binding energies of Hg with Pd n clusters are directly proportional to charge transfer, i.e., greater the charge transfer, higher is the binding energy.