The Premier League club confirmed Palacios' arrival on its official website, adding another creative option to manager Alvaro Arbeloa's squad as preparations continue for the new campaign.
The young Spaniard, who came through Real Madrid's academy, is expected to compete for a place in Fulham's attacking midfield. Comfortable as a central attacking midfielder, Palacios plays in a position Iwobi has often described as his preferred role, although the Nigerian international has also excelled on the wings and in deeper midfield positions.
Iwobi has been one of Fulham's standout performers since joining from Everton, earning praise for his versatility, creativity and tireless work rate. His ability to adapt to multiple roles has made him a key figure in the team.
While Palacios' arrival is set to intensify the battle for places, it also gives Fulham greater depth and tactical flexibility as the club looks to improve on last season's campaign.
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