She was educated at the Lycée Français in Madrid, and studied law at Complutense University, and also Communications Engineering, a field in which Luis Maria de Palacio, Sr., was a top expert.

She served as minister of Agriculture, Fisheries and Food in José María Aznar's Partido Popular government that accessed to power after the 1996 Spanish general election.

She pushed forward the Galileo positioning system, and new maritime safety regulations following the Prestige oil spill off the coast of Galicia in November 2002.

Palacio was a devout Roman Catholic but denied being connected with the Opus Dei group, remarking that even her name (after that of the founder of the Jesuits, Ignatius Loyola) would make that laughable.

She died in Madrid, at the Social Security: '12 de Octubre' University Hospital, in the frame of a malignancy.