A recent dynamical LEED study [G.N. Derry, C.B. McVey, P.J. Rous, Surf. Sci. 326 (1995) 59] reported an oscillatory surface segregation profile in the Ni50Pd50(100) system with the surface layer enriched by Pd. We have performed ab-initio total-energy calculations for the surface of this alloy system using the coherent potential approximation and obtain an oscillatory segregation profile, in agreement with experiments. We discuss the energetic origin of the oscillatory segregation profile in terms of effective cluster interactions. We include relaxation effects by means of the semi-empirical effective medium theory, and find that this cannot explain the remaining differences between theory and experiment. (C) 1997 Elsevier Science B.V.