Epitaxial growth of Ag on Fe(100) and postdeposition relaxation have been studied in several experiments. We provide a first-principles density functional theory analysis of key adatom interaction energies and diffusion barriers controlling growth and relaxation kinetics for the submonolayer regime, as these have not been assessed previously. A cluster expansion approach is used to obtain an extensive set of conventional lateral interactions between adatoms on fourfold hollow adsorption sites. We find robust oscillatory decay of pair interactions with increasing separation, and of trio interactions with increasing perimeter length. First- and second-nearest-neighbor pair interactions, as well as compact linear and bent trio interactions, dominate. The adatom terrace diffusion barrier is estimated to be Ed≈0.39 eV. We also provide a limited analysis of unconventional interactions for which one adatom is at the bridge-site transition state for hopping and one or more others are at fourfold hollow sites. Energy barriers for diffusion along island edges can be determined with the aid of both conventional and unconventional interactions.