[citation needed] Palacio was chosen as Lucio Gutiérrez's running mate in the 2002 election.

It was a common sight during the campaign to see Gutiérrez, dressed in his army fatigues, accompanied by Palacio, wearing surgical scrubs.

For a period of several months prior to assuming office, he had been a critic of the Gutiérrez regime, saying that the country was "falling apart" and in need of "intensive care".

Palacio was one of the candidates for the position of director-general of the World Health Organization, to be decided in a vote on 9 November 2006.

However, on 18 October 2006, he announced he would not be pursuing the position, preferring to concentrate on his presidency until the last day of his mandate.