He appeared in 520 competitive matches across both major levels of Spanish football, amassing La Liga totals of 130 games and four goals in seven seasons.

A product of CA Osasuna's youth system, Palacios – born in Pamplona, Navarre – made his first-team debut on 6 April 1994 in a 1–0 home win against CD Tenerife, with the team eventually finishing the season in last position.

He went on to become an important element of the squad in the following years, which included six Segunda División seasons; in 1999–2000, as they returned to La Liga after a six-year absence, he scored five goals in 40 matches, and also served as one of their captains.

For the 2004–05 campaign, Palacios joined Soria's CD Numancia, where he was an undisputed first-choice from the start, helping the side to return to the top flight in 2008.

Three months later, Palacios played six matches in the category's FIFA U-17 World Cup, as the country finished in second position in Italy.