A new embedded-atom method (EAM) potential has been constructed for Ag by fitting to experimental and first-principles data. The potential accurately reproduces the lattice parameter, cohesive energy, elastic constants, phonon frequencies, thermal expansion, lattice-defect energies, as well as energies of alternate structures of Ag. Combining this potential with an existing EAM potential for Cu, a binary potential set for the Cu–Ag system has been constructed by fitting the cross-interaction function to first-principles energies of imaginary Cu–Ag compounds. Although properties used in the fit refer to the 0 K temperature (except for thermal expansion factors of pure Cu and Ag) and do not include liquid configurations, the potentials demonstrate good transferability to high-temperature properties. In particular, the entire Cu–Ag phase diagram calculated with the new potentials in conjunction with Monte Carlo simulations is in satisfactory agreement with experiment. This agreement suggests that EAM potentials accurately fit to 0 K properties can be capable of correctly predicting simple phase diagrams.