His notable works include Neskirkja (built 1952–1957), which is often considered the first modern church in Iceland.
[3] The Neskirkja Planning Committee sought out the view of renowned Finnish architect Eliel Saarinen to assess the architectural style of the building; Saarinen praised the design.
[4] In 1997, several architects and experts on architecture placed Neskirkja on their list of the ten most beautiful buildings in Iceland.
[5] Pálsson designed Gljúfrasteinn, the home of Halldór Kiljan Laxness who was awarded the Nobel Prize in Literature in 1955.
[3] Pálsson also designed two lighthouses,[6] both built in 1946:[7] Stokksnesviti just east of the town of Höfn in south-east Iceland and Malarrifsviti south of the glacier Snæfellsjökull in the west of Iceland.