We explored the origin of the enhanced activity of Pd-alloy electrocatalysts for the O2 reduction reaction by correlating the electrocatalytic activity of intrinsic Pd and Pt surfaces and Pd and Pt overlayers on several substrates with their electronic properties, and established the volcano-type dependence of O2 reduction activity on the binding energy of oxygen and the d-band center of the top metal layer. Intrinsic Pd and Pt surfaces bind oxygen too firmly to allow efficient removal of the adsorbed reaction intermediates. Therefore, they do not have the highest activity and are not on the top of the volcano plot. A Pd overlayer on a Pd3Fe(111) alloy, was predicted to lie on top of the volcano plot, and thus, it appears to be the most active catalyst among investigated ones because of its moderate interaction with oxygen. The results can help in designing better electrocatalysts for fuel cells and other applications.