When it incorporated in 1925, it was renamed in honor of Clarence William Palmer (1850–1919), who owned much of the land upon which the town was established.

[7][1] The town thrived during the early 20th century due in large part to mining operations conducted in the area by the Tennessee Consolidated Coal Company.

The point where Grundy, Marion, and Sequatchie counties meet is located just south of Palmer.

Tennessee State Route 108 passes through Palmer, connecting the town with Gruetli-Laager to the west and Whitwell in the Sequatchie Valley to the southeast.

[10] According to the United States Census Bureau, the town has a total area of 4.9 square miles (12.8 km2), all of it land.