The area grew rapidly during the last third of the 19th century, particularly during the presidency of Domingo Faustino Sarmiento, who was responsible for the creation of the Buenos Aires Zoological Gardens and the Parque Tres de Febrero in 1874, and Plaza Italia and the Palermo Race Track in 1876, all on the grounds of what had been Rosas' pleasure villa.

Although appearing as one big swath on the official map, Palermo can be subdivided into several contrasting and acutely individual parts, the most clearly delimited of which may be considered further de facto neighborhoods of Buenos Aires.

Neighboring "Barrio Parque" is strictly a residential area, laid out in winding streets by Carlos Thays; many of the wealthy and famous own homes in this section, which also includes numerous embassies and the San Martín National Institute.

MALBA, the Museum of Latin American Art in Buenos Aires, is located next door between Barrio Parque and the Paseo Alcorta shopping center.

Las Cañitas, further northwest along Libertador, was a tenement district early in the twentieth century; but it has since become an upmarket area of high-rises, restaurants and bars, particularly in the vicinity of the Palermo Racetrack and the Campo Argentino de Polo.

The neighborhood is centered on Plaza Palermo Viejo, and reflects an older Spanish Colonial Revival style in architecture, often "recycled" with modern elements.

Borges's poem "Fundacion mitica de Buenos Aires" names a typical square (bordered by Guatemala, Serrano, Paraguay, and Gurruchaga streets) adjacent to his childhood home, a popular tourist landmark.

It was historically a residential area, popular with immigrant communities from Poland, Armenia, Ukraine, and Lebanon; as well as old Spanish and Italian families, whose traditions are reflected in local restaurants, churches, schools and cultural centres.

The atmosphere in many cafés and restaurants strives to be "alternative", which makes this area of the city especially popular with young, upper-middle-class Argentines as well as foreign tourists looking for a "hipster" neighborhood.

In the mid-nineties a number of TV and radio producers installed themselves in the area between Córdoba, Santa Fe, Dorrego, and Juan B. Justo Avenues in Palermo Viejo.