Palacio played college soccer at Stony Brook University under head coach Cesar Markovic.

During his college years Palacio also played with Fort Wayne Fever in the USL Premier Development League.

Following the surgeries (knee and appendix) and a 14-month recovery, Palacio signed with Long Island Rough Riders of the USL Premier Development League where he had the opportunity to show that his recovery was completed, scoring an additional 6 goals in 15 appearances in 2009[2] Following the end of the 2009 PDL season, Palacio, together with his Stony Brook teammate Petar Raković, traveled to Europe where, while preparing for trials with some clubs in Denmark and training in Serbia, he was invited to take part in a friendly game between Radnički Obrenovac and Serbian SuperLiga club OFK Belgrade.

Palacio played with Obrenovac throughout the 2009–2010 season, scoring 3 goals in 25 games, before returning to the United States in the summer of 2010.

After a brief stint playing for New York-based amateur club New York Pancyprian-Freedoms during their 2010 Lamar Hunt US Open Cup run, Palacio signed with Fort Lauderdale Strikers of the North American Soccer League on March 16, 2011.