Palmer's father, a bookseller, encouraged him to become a painter. By 1819 he had already exhibited small landscape studies at the Royal Academy. The works that survive from 1819 to 1821 are able but conventional. In the following years, however, there are signs of a profound change in his thinking, perhaps connected with his conversion from the Baptist faith to a personal form of High Anglicanism and with his discovery of medieval art.

A sketchbook of 1824 (British Museum), rediscovered in 1956, already shows all the elements of his visionary style: a mystical but precise depiction of nature and an overflowing religious intensity, united by a vivid re-creation of the pastoral conventions. In October 1824 the painter John Linnell took him to see William Blake, who encouraged Palmer in the mystical direction he was taking and provided examples of his own work for Palmer to follow. Blake's influence can be seen clearly in the “Repose of the Holy Family” (1824–25) and the series of sepia drawings of 1825.

In 1826 Palmer visited Shoreham in Kent, and the following year he settled there. His Shoreham paintings became more naturalistic but were still charged with visionary intensity. The years 1827–30 were his most productive, but after 1830 his work shows unmistakable signs of artistic decline. As his religious fervour faded, the precarious balance between realism and vision was lost. He left Shoreham for London in 1834, and expeditions to Wales and Italy confirmed the break with his own past.

Palmer's real forebears are writers rather than painters. He read with enthusiasm the writings of the German mystic Jakob Böhme, the pastoral poems of John Milton, and above all the works of John Bunyan, whose “Countrey of Beulah” is the nearest equivalent to Palmer's “Valley of Vision.”