We employed periodic density functional slab model calculations and CO as probe molecule to examine the adsorption propensity of various sites of a Pd(111) substrate near subsurface carbon atoms. On all sites studied, CO adsorption is weakened compared to a clean Pd(111) surface. That destabilization, ∼50% at fcc sites directly above interstitial carbon and slowly decreasing at more distant hollow sites, is at variance with the conclusion recently derived from STM experiments, that subsurface impurities on Pd(111), tentatively assigned as interstitial atomic carbon species, are able to stabilize CO at nearby fcc adsorption sites.