Self-consistent periodic density functional theory (PW91-GGA) calculations are employed to study the oxidation of methanol on PtRu(111). Geometries and energies for all the intermediates involved are analyzed, and the oxidation network is mapped out to illustrate the reaction mechanism. On PtRu(111), the Ru atoms with less electronegativity are more favorable to binding the adsorbates than the Pt atoms. Alloying Pt with Ru weakens the bond of CO to Pt, but strengthens the bond of CO to Ru. All possible pathways through initial C–H, O–H, and C–O bond scissions are considered. The initial O–H bond scission is found to be the most favorable and bears an energy barrier comparable to that for methanol desorption. The further oxidation occurs preferentially via the non-CO path from species CHO. The most possible reaction pathway of methanol on PtRu(111) is CH3OH → CH3O → CH2O → CHO → CHOOH → COOH → CO2. Furthermore, the activation of H2O on PtRu(111) is more favorable than that on the pure Pt(111) surface. The enhancement of methanol oxidation catalytic activity of the PtRu alloy is due primarily to altering the major reaction pathways from the CO path on pure Pt to the non-CO path on the alloy surface as well as promoting adsorption of methanol and formation of active OH species from H2O.