Propylene oxide (PO) is one of the 50 most produced chemicals according to the production volume. Environmental and economic drawbacks of conventional PO production processes necessitate new production methods. Among the new production alternatives, direct epoxidation of propylene to propylene oxide by molecular oxygen is a highly desired method and seen as the holy grail of propylene epoxidation studies. In this study, the propylene epoxidation mechanism on an Ag2O(001) surface is investigated computationally by means of density functional theory (DFT) calculations using the Vienna Ab-initio Simulation Package (VASP). A perfect Ag2O(001) surface and a surface with one O vacancy are utilized for this purpose. It is found that propylene oxide can be directly formed on an Ag2O(001) surface whether there is an oxygen vacancy or not. The rate controlling step is PO desorption from both surfaces. PO isomers, i.e. acetone and propanal, can also be formed on these surfaces. However, activation barriers do exist for these molecules. Direct allyl formation on the Ag2O(001) surface is found to be unfavorable unlike what is proposed in the literature. On the other hand, it is observed that an allyl radical can be formed either via an oxametallocycle path or after the formation of propylene oxide. In fact, the discovered allyl radical formation pathway from propylene oxide is found as the most probable successive reaction pathway because of the high desorption barrier of PO.