For electrocatalytic reduction of CO₂ to CO, the stabilization of intermediate COOH^* and the desorption of CO^* are two key steps. Pd can easily stabilize COOH^*, whereas the strong CO^* binding to Pd surface results in severe poisoning, thus lowering catalytic activity and stability for CO₂ reduction. On Ag surface, CO^* desorbs readily, while COOH^* requires a relatively high formation energy, leading to a high overpotential. In light of the above issues, we successfully designed the PdAg bimetallic catalyst to circumvent the drawbacks of sole Pd and Ag. The PdAg catalyst with Ag-terminated surface not only shows a much lower overpotential (-0.55 V with CO current density of 1 mA/cm²) than Ag (-0.76 V), but also delivers a CO/H₂ ratio 18 times as high as that for Pd at the potential of -0.75 V vs. RHE. The issue of CO poisoning is significantly alleviated on Ag-terminated PdAg surface, with the stability well retained after 4 h electrolysis at -0.75 V vs. RHE. Density functional theory (DFT) calculations reveal that the Ag-terminated PdAg surface features a lowered formation energy for COOH^* and weakened adsorption for CO^*, which both contribute to the enhanced performance for CO₂ reduction.