RB Leipzig's interest has been known for several days, driven in part by the appointment of fellow Argentine Martin Demichelis as head coach, but according to Fabrizio Romano, Ipswich Town have also entered the picture as they look to strengthen their midfield following promotion.
Nothing concrete has yet emerged from either side, with talks described as ongoing rather than close to conclusion, though Romano reports that the 27-year-old is ready for a new challenge after his long spell at the BayArena.
Palacios joined Leverkusen from River Plate in January 2020 and has gone on to make 185 appearances for the club, scoring 15 goals and adding 17 assists, while winning an unbeaten Bundesliga title in 2023-24 along with the German Cup and Super Cup that same season.
He remains under contract until 2030, with no release clause known to exist, meaning any move would require Leverkusen's agreement on a fee. River Plate retain a 10 per cent sell-on clause from when they sold him to Germany, giving the Argentine club a financial stake in the outcome.
A World Cup winner with Argentina in 2022, Palacios also featured at this summer's tournament, playing the full 90 minutes in the final group game against Jordan before remaining an unused substitute as Argentina reached the final.
Ipswich manager Gary O'Neil has made clear midfield reinforcements are a priority after being left short in the position during pre-season, though a move to Leipzig — which would keep Palacios in the Bundesliga and reunite him with a compatriot in the dugout — is currently considered the more advanced of the two options.
Leverkusen are expected to resist an easy departure given Palacios' importance to the side, though his availability comes as the German club continue reshaping their squad, having recently agreed a deal for Napoli left-back Miguel Gutierrez.
Ipswich, for their part, have also been linked with Fulham's Sasa Lukic and Burnley's Florentino as alternative midfield options, suggesting O'Neil is working through several targets simultaneously rather than pinning his hopes solely on Palacios.