We have evaluated the performance of 24 popular density functionals for describing the potential energy surface (PES) of the archetypal oxidative addition reaction of the methane C-H bond to the palladium atom by comparing the results with our recent ab initio [CCSD(T)] benchmark study of this reaction. The density functionals examined cover the local density approximation (LDA), the generalized gradient approximation (GGA), meta-GGAs as well as hybrid density functional theory. Relativistic effects are accounted for through the zeroth-order regular approximation (ZORA). The basis-set dependence of the density-functional-theory (DFT) results is assessed for the Becke-Lee-Yang-Parr (BLYP) functional using a hierarchical series of Slater-type orbital (STO) basis sets ranging from unpolarized double-ζ (DZ) to quadruply polarized quadruple-ζ quality (QZ4P). Stationary points on the reaction surface have been optimized using various GGA functionals, all of which yield geometries that differ only marginally. Counterpoise-corrected relative energies of stationary points are converged to within a few tenths of a kcal/mol if one uses the doubly polarized triple-ζ (TZ2P) basis set and the basis-set superposition error (BSSE) drops to 0.0 kcal/mol for our largest basis set (QZ4P). Best overall agreement with the ab initio benchmark PES is achieved by functionals of the GGA, meta-GGA, and hybrid-DFT type, with mean absolute errors of 1.3-1.4 kcal/mol and errors in activation energies ranging from +0.8 to -1.4 kcal/mol. Interestingly, the well-known BLYP functional compares very reasonably with an only slightly larger mean absolute error of 2.5 kcal/mol and an underestimation by -1.9 kcal/mol of the overall barrier (i.e., the difference in energy between the TS and the separate reactants). For comparison, with B3LYP we arrive at a mean absolute error of 3.8 kcal/mol and an overestimation of the overall barrier by 4.5 kcal/mol. © 2005 Elsevier B.V. All rights reserved.