The activity and stability of Pt(5)Gd for the oxygen reduction reaction (ORR) have been studied, using a combination of electrochemical measurements, angle-resolved X-ray photoelectron spectroscopy (AR-XPS), and density functional theory calculations. Sputter-cleaned, polycrystalline Pt(5)Gd shows a 5-fold increase in ORR activity, relative to pure Pt at 0.9 V, approaching the most active in the literature for catalysts prepared in this way. AR-XPS profiles after electrochemical measurements in 0.1 M HClO(4) show the formation of a thick Pt overlayer on the bulk Pt(5)Gd, and the enhanced ORR activity can be explained by means of compressive strain effects. Furthermore, these novel bimetallic electrocatalysts are highly stable, which, in combination with their enhanced activity, makes them very promising for the development of new cathode catalysts for fuel cells.