Based on a combined density functional theory and experimental study, we present that the electrochemical activity of Pd3Co alloy catalysts toward oxygen reduction reaction (ORR) can be enhanced by adding a small amount of Ir. While Ir tends to favorably exist in the subsurface layers, the underlying Ir atoms are found to cause a substantial modification in the surface electronic structure. As a consequence, we find that the activation barriers of O/OH hydrogenation reactions are noticeably lowered, which would be mainly responsible for the enhanced ORR activity. Furthermore, our study suggests that the presence of Ir in the near-surface region can suppress Co out-diffusion from the Pd3Co substrate, thereby improving the durability of Pd-Ir-Co catalysts. We also discuss the relative roles played by Ir and Co in enhancing the ORR activity relative to monometallic Pd catalysts.