The Twins optioned Palacios to Triple-A St. Paul on Wednesday.
Palacios will cede his spot on the 26-man active roster and in the starting lineup to fellow shortstop Carlos Correa (illness), who will return from the COVID-19-related injured list for Wednesday's game against the Yankees. The 25-year-old started each of the past eight games for the Twins, slashing a paltry .208/.259/.208 but providing quality defense at shortstop.