The former Boca Juniors ace had indicated last month that he would like to move to a bigger club, but now he is prepared to stay at Villarreal.
The flamboyant hit-man missed the final four months of last season due to a freak injury when an advertising hoarding collapsed and fell on his leg while he was celebrating a goal.
There had been reports of a bust-up between the Argentine international and coach Victor Munoz, but Palermo, who has now fully recovered fitness, has dismissed the suggestions and insists all he is concentrating on is next season.
"I want to work hard after recovering from the injury I had and have a good season," said Palermo. "I am looking forward to having the chance of playing in the Intertoto Cup and La Liga with Villarreal.
"The only thing I have in my mind is next season and I want to forget everything that happened last season because that doesn't make me feel good.
"I am only thinking about my work for Villarreal and I don't want any more discussion about whether I am going or not. I have a three-year contract with this club.
"Last season we were in a precarious situation and at times I felt like leaving but if I said something, it was only because I liked the idea of playing for a bigger team. I have never been uncomfortable here.
"I've always had a good relationship with the board members and the fans.
"And I don't have any problem with Victor Munoz, you can see that in any training session. Having disagreements and constant discussions doesn't help anyone so I just have to work hard."
