Before September 1881, Palisade was part of the Ute Indian Reservation. After the Utes were moved to the Utah reservation, white settlers began to develop the land. Mary Currie filed a patent for 133 acres of land at the center of what was then called Palisades in 1891, but probably occupied it earlier.
Palisade - without the s - was incorporated as a town in 1904, and the first municipal election was May 2. Herman Kluge was elected Mayor. Trustees were W.A. Powell, W.E. Bell, Dr. C.R. Brown, D.M. Landreth, J.A. Pearson, and George W. Sawede.