Selective hydrogenation (or semi-hydrogenation) of acetylene into ethylene is an important industrial process. The aim of the present work is thus to learn regularities governing the CO-induced segregation and elaborate practical procedures for tuning the surface structure of Pd-Ag nanoparticles to improve their catalytic performance towards the selective hydrogenation of acetylene to ethylene. Utilizing NAP XPS the CO adsorption-induced Pd atoms segregation in supported PdAg2/Al2O3 catalysts already at room temperature has been shown. The surface enrichment with Pd further increases if the treatment temperature is increased up to 250 °C. This specific configuration with a redistributed Pd/Ag surface atomic ratio is appreciably stable and self-sustained even at the absence of CO at moderately elevated temperatures. Nevertheless, a reductive treatment in hydrogen at 450 °C reverts the nanoparticle surface structure to the pristine state. Catalytic properties of this peculiar CO-induced configuration of PdAg2/Al2O3 towards the selective acetylene hydrogenation was investigated using a combination of NAP XPS and MS techniques. The PdAg2/Al2O3 catalyst with the surface enriched with Pd due to the CO-induced segregation manifests improved activity with 100 % selectivity under the conditions used. The results obtained clearly demonstrate that CO adsorption-induced segregation is a powerful tool that can be used to optimize the surface composition and catalytic performance of bimetallic nanoparticles.