The Outrigger Restaurant sets one block off of Main Street on the corner of Commerce and 6th Street; one block off the smallest beach on the Texas coast. There is a yearly Sailing regatta from this beach area. Across the street is a nice city park where each year the city gets to watch the local Great Horned owls nest in one of the old pawn trees.

Palacios is known as the "Shrimp Capital of Texas" with approximately 400 vessels calling Palacios their home port. There are three turning basins under the direction of the Matagorda County Navigation District No. 1. Palacios is also part of the "Great Texas Coastal Birding Trail", listing several sites in the Palacios area. The town boasts seven miles of shoreline so recreational fishing is big here, too, as are sailing, kayaking and canoeing. There's a stretch of sandy beach on the bay for swimming and sunbathing, plus a large community pool open to the public.

The City by the Sea Museum is located at 401 Commerce Street in the historic Hill Building. The Palacios Area Historical Association operates the museum. For days and hours of operation call: 361-972-1148 or check their web site. Part of the La Salle Odyssey, the museum also provides history of Camp Hulen, the Luther Hotel, Palacios Pavilions, and other historical events of Palacios.

Palacios is the home of the Texas Historical Commission Shipwreck Project in 1996. The ship the "Belle," belonging to French explorer Rene Robert Cavalier, Sieur de la Salle, which sunk in 1686, was excavated from Sept. 1996 to April 1997, and all of the artifacts as well as the hull of the ship, were brought into the headquarters in Palacios before being taken to Texas A&M for conservation. A replica of the "Belle", "la Petite Belle" will soon become a part of the 7 county LaSalle Odyssey.

Palacios has a public library known as "the best little library in Texas." Founded in 1907 by five women and located on Main Street, the library has several computers available for public use, a wide range of local and Texas history books, the latest novels and non-fiction works and a good children's section.

A Seawall that provides about 1 1/2 miles of concrete sidewalk alone the bay is a favorite spot for many walkers. There are also free boat ramps and numerous lighted jetties and piers for fishing. There is a airport with a nine-hole golf course located on the Municipal Airport grounds on highway 35 on the west side of Palacios. Palacios Municipal Airport has three 150x5,000-foot concrete runways.

Many shore birds can be seen here, with the Brown Pelicans here year round. White Pelicans can be seen in the winter time, as can Sandhill Cranes, Geese and numerous Hawks. Palacios is situated directly on the central flyway, a migration route where four major bird groups converge during the spring and fall. Not surprisingly, birding is a popular pastime and you can spot painted buntings, scarlet tanagers, roseate spoonbills, hummingbirds, warblers, red-tailed hawks, white and brown pelicans and great blue herons.

Historical Murals adorn many buildings around Palacios.