The atomic structure and the electronic properties of the (111) surface of Al can be modified by alloying with Ag which can be introduced to the surface either externally by vapor deposition or internally by segregation from the bulk in a dilute AlAg alloy. Evaporated Ag forms islands on Al(111) during the initial stage of growth, while perfect epitaxy is observed for layers that are as thick as 8 monolayers. Upon subsequent heat treatment of the sample at increasing temperatures Ag diffuses into the Al substrate, and the composition at the surface is changed from pure Ag to pure Al. During this process, the temperature-dependent changes in the local atomic structure of the surface is observed in real time using secondary-electron imaging. It is found that hexagonal Ag 2 Al phase is formed at 410 K. This surface, when used for further Ag evaporation, imposes an hexagonal structure on the growing film. This observation points to a small stacking-fault energy for the (111) layers of Ag. The results on Al-3 at.% Ag show that, above 450 K, Ag segregates to the surface in form of small hexagonal Ag 2 Al-like clusters. Between 610 and 690 K, the clusters reversibly dissolve without changing the average Ag concentration at the surface, suggesting a first-order phase transition.