A generalized density functional theory (DFT) is proposed based on a generalized Hohenberg-Kohn theorem with the pair density as the key quantity and the kinetic energy as a universal functional of the pair density. It is assumed that there exists an effective interaction potential which, via the corresponding two-particle (2P) Schrodinger equation, generates 2P orbitals (geminals) from which follows the pair density, just as in the conventional DFT the density follows from 1P orbitals (as the solutions of an effective 1P Schrodinger equation). According to three different representations (natural spectral resolutions) of the pair density or the cumulant pair densities in terms of geminals, three versions of a pair DFT (PDFT) are formally sketched. Also considered are the relation between electron correlation and particle-number fluctuations in fragments of the system and the use of the pair density for an estimation of such fluctuations. © 1996 John Wiley & Sons, Inc.