The Udinese defender has been called up by Italy head coach Roberto Mancini for the forthcoming Nations League fixtures against France and Belgium after FIFA approved his change of sporting nationality.
Palma, who was born in Berlin, had previously represented Italy at under-15 level before switching to Germany's youth international setup.
He subsequently featured for the German under-16 and under-17 teams, raising hopes that he could eventually become part of the senior national team's defensive options.
However, Italy have now secured his international future, with the 18-year-old receiving his first senior call-up for the November fixtures.
His inclusion follows the withdrawal of Roma defender Gianluca Mancini, who has been forced to miss the matches through injury.
Italy will face France on November 12 at the San Siro in Milan before travelling to Brussels to meet Belgium on November 15.
For Palma, the call-up represents an important milestone in his development and a significant decision in his international career.
The centre-back has progressed through the ranks at Udinese after developing in Germany, having previously been associated with Hertha Berlin before moving to Italy in 2022.
His performances have attracted considerable attention, with Borussia Dortmund reportedly prepared to offer €30 million for his services during the summer transfer window.
That level of interest reflects the potential attributed to the defender, who is regarded as one of the emerging talents in his position.
Palma's international decision is another reminder of the competition between national associations to secure the services of eligible young players before they establish themselves at senior level.
Germany had previously benefited from his participation in their youth teams, but Italy's successful application to FIFA means he can now continue his international career with the Azzurri.
There is also another unresolved international eligibility situation involving Nicolò Tresoldi, the 22-year-old Club Brugge forward who has attracted interest from both Italy and Germany.
Unlike Palma, Tresoldi has yet to make his final decision, leaving both national associations waiting to discover which country he will represent in the future.
For Italy, securing Palma is a significant addition to their defensive options, while Germany have lost the opportunity to develop a player they had previously incorporated into their youth international structure.
At just 18, the Udinese defender has considerable time to establish himself at senior international level, but his first call-up represents an important step towards fulfilling that potential.