Acetylene semihydrogenation is an important process both theoretically and experimentally. Pure Pd catalysts usually suffer from limited selectivity for ethylene products and poor stability. Pd-Bi bimetallic compounds are synthesized and show not only excellent catalytic performance but also remarkable long-term stability. However, the detailed mechanism is still unclear. In this paper, the acetylene semihydrogenation mechanism on Pd(100), Pd3Bi1(100), and Pd1Bi1(100) is studied by density functional theory (DFT) calculation and microkinetic modeling. Adding Bi causes the surface d-band center (εd) to move to a lower energy, and the adsorption strength of the intermediate becomes weaker. Besides, ethylidyne (CCH3) formation becomes more difficult on the Pd-Bi alloy due to the lack of continuous surface Pd atoms. As a spectator, CCH3 deactivates the Pd and Pd-Bi alloys by a steric effect. However, the selectivity for ethylene on the Pd-Bi alloy is still high because of the weakly bonded ethylene. We found the relationship between εd and the catalysts' activity and selectivity. This study may supply some clues for the design of selective hydrogenation catalysts.