Thin-film reaction between Pb and the Ag-20 at.% Pd alloy in the temperature range 160-200 °C has been studied by x-ray diffraction. The reaction results in the formation of the Pb2Pd compound by depleting Pd from the alloy. The rate of depletion is too fast to be explained by lattice diffusion in the alloy at these temperatures. In fact, it is shown that the intermixing of Ag and Pd to form the alloy by lattice diffusion can only occur around 450 °C. On the other hand, grain-boundary diffusion is faster, but it is not obvious how Pd atoms within the alloy grains can be depleted by grain-boundary diffusion. To overcome this difficulty, a kinetic model with a moving interface has been developed to explain the low-temperature reaction. The model seems to agree quite well with the experimental results.