Using low-energy electron microscopy, we determine that self-diffusion of the Cu(001) surface is slowed by the presence of a c(2 x 2)-Pd buried surface alloy. We probe surface diffusion using Cu-adatom island-ripening measurements. On alloyed surfaces, the island decay rate decreases monotonically as the Pd concentration is increased up to similar to 0.5 monolayer (ML), where the 2 x 2 buried alloy is Pd saturated. We propose that the Pd slows island ripening by inhibiting the diffusion of surface vacancies across terraces. For dilute alloys (less than or similar to 0.2-ML Pd), this conclusion is supported by density-functional theory calculations, which show that surface vacancies migrate more slowly owing to an attraction to isolated buried Pd atoms. The results illustrate a fundamental mechanism by which even a dilute alloy thin-film coating may act to inhibit surface-diffusion-mediated processes, such as electromigration.