Interactions of thin films of Al and Pd-W alloys (Pd80W20 and Pd20W 80) deposited on Si and on SiO2 have been studied using Auger-electron spectroscopy, Rutherford backscattering spectrometry, x-ray diffraction, and forward current-voltage measurements of Schottky-barrier height. For the bilayer films deposited on the inert substrate of SiO2, Pd reacts with Al, forming Al-rich Al-Pd intermetallic compounds at 400 °C. Furthermore, in the Pd-rich alloys (Pd80W20) Al permeates through the whole alloy film readily at 500 °C, while in the W-rich Pd20W 80 the integrity of the alloy film is preserved even following annealing at 600 °C. For the bilayer films deposited on single-crystal Si, the results of annealing show extraction of Pd to both sides of the alloy, forming Pd2Si at the Si side and Al-Pd intermetallic compounds at the Al side. In the case of the Pd-rich alloy (Al/Pd 80W20/Si) contact deterioration due to Al penetration to the substrate interface is observed at 500 °C and possibly at 400 °C. In the case of the W-rich alloy (Al/Pd20W80/Si) the stability of the contact is preserved even following annealing at 550 °C for 30 min; the structure after the annealing is Al-Pd/Pd-W/Pd2Si/Si. The W-rich alloy is very promising for contact applications in Si devices due to the fact that both a shallow silicide contact and a built-in diffusion barrier are simultaneously obtained.