Palmerston is located in Wellington County, west of Arthur, northeast of Listowel, and northwest of Kitchener and Waterloo.The opening in 1871 of a station on the main line of the Wellington, Grey and Bruce Railway soon to be completed from Guelph to Southampton, provided the nucleus around which a community developed. In its original concept the railroad was to run from Guelph to Harriston and would not have gone through Palmerston. Listowel needed to be linked to the railroad and it was decided to bend the route toward Listowel. It was also decided that a yard with maintenance shops would be needed. As soon as the railroad decided where it would build, people started buying property around the area for businesses and homes.Thomas McDowell was the first settler in 1854 on the site. In 1872 McDowell and William Thompson who owned adjoining land, began selling town lots and by 1873 the community had 150 inhabitants. In 1873 a branch line to Listowel was completed and a post office called Palmerston, named after Lord Palmerston, a celebrated English statesman, was opened.