Our first-principles study has revealed unexpected spin polarization of the Pd(001) substrate in contact with antiferromagnetic CoO overlayers. We give an evidence that the ferromagnetism of Pd is caused by the zigzag positions of Co atoms with respect to the Pd interface, resulted from the lattice-mismatch driven structural relaxation. Because ofthe itinerant nature of its 4delectrons, we see that the ferro-magnetic properties of Pd are highly sensitive to the local environment and can be enhanced further by increasing the thickness of CoO overlayer film or/and by applying an additional uniaxial pressure along c-axis exerted externally on the bottom layers of the Pd substrate. Our finding provides new function-ality for the interfacial moments of the CoO/Pd system, which can be accessed experimentally, e.g., by the magneto-optical Kerr effect (MOKE) or/and by element-resolved X-ray magnetic circular dichroism (XMCD) measurement.