US Città di Palermo dates back to 1900, although the structure of the team now is from 1987. The team has been refounded twice before that: in 1927 and 1940. One thing about Palermo's history is that the foundation of the team has changed many times. As many other Italian teams Palermo was founded by foreigners who wanted to play football in their city. In Palermo's case it was Ignazio Majo Pagano who studied in London who brought the sport with him to the Sicilian city. The team was first founded as Anglo Panormitan Athletic and Football Club but was changed in 1907 to Palermo Foot-Ball Club. 

During the World War I the city lost it's interest in the team and was almost completely dissolved. However some young students in the city didn't want this to happen and in 1919 the club came back and changed it's name to Unione Sportiva Palermo. In 1927 the club was forced to merge with Vigor Palermo in order to survive because of financial problems and the name was now changed back to Palermo FootBall Club and the new team was admitted in to Prima Divisione (equivalent to Serie C1).

The team quickly came back to Serie A but hereafter the team elevated frequently between Serie A - and B untill the team once again was forced into a merger and a new relegation to Serie C1 in 1940. This time the team was named Unione Sportiva Palermo-Juventina after a merger with Unione Sportiva Juventina Palermo. The returned to Serie B already in 1943 and Serie A in 1948. After this the team continued it's yo-yo tendencies between Serie A and B (and changing names to first Società Sportiva Palermo in 1967 and Società Sportiva Calcio Palermo in 1977), first reaching their biggest achievement in 1974 where they lost the Coppa Italia final to Bologna. This ended the same way in the Coppa Italia final in 1979, only this time Palermo lost to Juventus. 

After the season 1985/86 however the team suffered it's hardest blow so far as the team had to dissolve completely for a year because of financial problems. The team refounded in 1987 though with their current name, US Città di Palermo, and started all over in Serie C2 which they won immediately and promoted to Serie B in 1991 but only for a year. In 1997 however they fell back to Serie C1 again. It went fast after this and the team returned to Serie A in 2004/05 after the team was bought by Maurizio Zamparini in 2002, who has contributed alot to the teams renaisance by some major signings as Luca Toni, Simone Pepe, the Filipini twins and Fabio Grosso. 

In 2005 the team had it's first time ever in a European tournament partecipating in the UEFA Cup and has been in Europe three times since, though not in the Champions League yet.