A tall central defender, Palacios started his career with
Olimpia and also played for
Victoria. After a 2003 friendly match between Olimpia and Chilean powerhouse
Colo-Colo,
Iván Zamorano (then a Colo-Colo player) recommended him for the Chilean club; however, both teams failed to reach an agreement despite Colo-Colo having registered the player, and Palacios remained in Olimpia. He joined
Marathón in May 2007, but left them in summer 2009 for a short spell at Olimpia only to return to Marathón the same year. In December 2010 he returned to Victoria. ==International career==