Palacios, who played in 54 games for the defending AL Central champions last season, had been designated for assignment Sunday when the club activated right-hander Cody Morris from the 60-day injured list.
Palacios had spent all this season at Triple-A Columbus, where he batted .217 with three homers, 13 doubles and 30 RBIs in 56 games.
The 26-year-old Palacios was selected by Cleveland in the third round of the 2018 amateur draft. At one time, he was once considered one of the club’s top prospects, but the Guardians have a surplus of young outfielders and middle infielders.
Palacios will be assigned to the Memphis Redbirds, the Cardinals’ Triple-A affiliate.