Abstract The adsorption of water and hydroxyl on the (111) surface of Ni is treated using a many-electron embedding theory to describe the electronic bonding, modelling the lattice as a 28-atom, three layer cluster. Ab initio valence orbital configuration interaction (multiple parent) calculations carried out on a local surface region permit an accurate description of bonding at the surface. Molecular H 2O adsorbed on the Ni(111) surface is found to prefer an atop atom site with an adsorption energy of 12 kcal/mol and a Ni-O equilibrium distance of 2.06 Å. The equilibrium geometry of H 2O is calculated to lie in a plane inclined by about 25° to the normal to the surface, but tilting the plane of the molecule from 0° to 50° or rotating the molecule about the Ni-O axis changes the energy only slightly. The OH radical binds strongly to the Ni(111) surface at both three-fold and bridge sites with adsorption energies of 87 kcal/mol and Ni-O bond lengths from 2.02–2.08 Å. The OH axis of adsorbed OH is inclined about 10° from the surface normal at a three-fold site. Dissociation of H 2O to OH and H adsorbed at nearby three-fold sites is exothermic, and for OH and H at a large distance of separation, the reaction H 2O(ads) α OH(ads) + H(ads) is 52 kcal/mol exothermic. A high energy barrier is found at the initial stage of dissociation. The work function decreases by ∽0.5 eV on H 2O adsorption and increases by ~0.2 eV on OH adsorption.