The face-centered cubic palladium (Pd) is paramagnetic but exhibits ferromagnetism in special environments, such as nanostructures and thin films. In this study, first-principles density functional calculations are performed to investigate the magnetism of the Pd(111) films. Results show that a ferromagnetic state is more stable than a paramagnetic state with a period of ∼2.5 monolayers. A Fermi surface nesting wave vector of 1.15 Å−1 in bulk Pd is observed along the [111] direction, which matches well with the periodicity of the thin film ferromagnetism. Quantum well states cross the Fermi level periodically in tune on Fermi surface nesting, which is the main cause of the ferromagnetism, satisfying the Stoner criterion. Strain effect is discussed, and tensile strain may strengthen the ferromagnetism. In addition, the surface energy of the Pd(111) film is affected by the quantum well states, showing the oscillatory film stability with thickness.