Ligand stabilized clusters of palladium are treated at density functional theory level to investigate effects of ligand coverage on properties, such as preferred coordination sites, metal–ligand binding energies, and structure. Systems investigated include cores of Pdn, for n = 1,2,13,16,19,23,35,39, stabilized by CO, PH3, and P(CH3)3, which are either known experimentally or have been proposed as intermediates in syntheses. Some of these systems, e.g. Pd13(CO)i, served as models to study aspects of ligand metal binding. The main results are the following. CO binds preferably as μ3 such that coordination sites share at most one vertex atom. The ligand coverage weakens Pd–Pd bonding and quenches the high spin of pure metal clusters. Ligands tend to stabilize Pd cores showing icosahedral Pd13 structural units such as biicosahedra in Pd19 and Pd23, whereas the corresponding bare metal clusters are most stable as octahedron and decahedron, respectively. The BP86 density functional yields reliable structure parameters and ligand metal binding energies in cases where comparison with experiment or accurate calculations is possible, only Pd(CO)i, i = 1–4, appears to be an exception.