An ab initio-based dynamic Monte Carlo simulation was developed and used to examine the kinetics of ethylene hydrogenation over Pd and PdAu alloys. The intrinsic activation barriers, overall reaction energies and chemisorption energies were calculated from first-principles density functional theoretical calculations. Lateral interactions were modeled by fitting ab initio data to semi-empirical bond order conservation and force field models. The results indicate that the intrinsic activation barriers for ethylene hydrogenation were considerably reduced from 15 to 7-8 kcal/mol due to the intermolecular interactions that take place on the surface at higher coverages. At higher temperatures or lower partial pressures of hydrogen, ethylene decomposition paths to the formation of ethylidyne become important. Alloying the surface with Au influences the intrinsic kinetics for hydrogenation by reducing the activation barrier for hydrogenation but increasing the barriers for H-2 dissociation and ethylidyne formation. This is primarily due to geometric effects that result from alloying. Electronic effects, while present, are significantly smaller. Despite its influence on specific elementary steps, Au appears to have little effect on the calculated turnover frequencies for ethane formation. There are relatively minor increases in the activation barrier from 7.0 to 7.2 to 8.0 as we move from Pd(111) to Pd 87.5% Au 12.5% to Pd 66.7% Au 33.3% respectively. The qualitative effects of Au as well as the quantitative apparent activation barriers reported here are consistent with known experimental results. Au reduces the binding energy of ethylene, which increases the surface hydrogenation activity. However, Au also reduces the number of sites that can activate hydrogen. This reduces the hydrogen surface coverage and subsequently decreases the rate of ethylene hydrogenation. These effects (the weaker metal-adsorbate bonds and the decreased hydrogen surface coverage) balance each other out whereby the addition of Au shows little effect on the simulated turnover frequency on a per Pd atom basis. The primary influence of Au therefore is to decrease the ethylene decomposition paths that lead to ethylidyne and CHx products.