The 29-year-old has signed a one-year contract extension that will keep him at Genoa until the summer of 2014.
Palacio came close to joining Inter Milan on transfer deadline day.
Genoa president Enrico Preziosi said: “We have extended Rodrigo’s contract for another year and have increased his wages.
“It is a sacrifice that we have done willingly because the player had been approached by many important teams throughout the transfer market.”
