Abstract A Pd-rich phase has been observed to segregate on the surface of PdAg alloys under the influence of 500 eV Ar + and N 2 + bombardment. By examining the X-ray photoemission spectra of these surfaces, we report changes in the structure of the Pd 3d peaks which are specifically linked to this phase. Studies of the spectral changes with Ar + dose show that one Pd 3d 5 2 peak arises from electrons originating from the altered overlayer and a second Pd 3d 5 2 peak arises from the underlying alloy with a binding energy dependent on the underlying concentration. The altered layer is found to vary in thickness between one and five layers, depending on the bulk alloy concentration. The thickness of this layer is also dependent on the nature of the primary ion since a different altered layer thickness is found using nitrogen ion bombardment.