Palacio rose to fame with her debut novel, Wonder (2012), inspired by a real encounter in which her young son cried upon seeing a girl with a facial difference. The novel tells the moving story of Auggie Pullman, a boy with Treacher Collins syndrome entering mainstream school for the first time. Wonder became a global phenomenon, spending over 120 weeks on the New York Times bestseller list and popularizing the anti-bullying message "Choose Kind." It was adapted into a successful 2017 film starring Julia Roberts, Owen Wilson, and Jacob Tremblay.
She followed with Auggie & Me (2015), a companion volume containing three stories from other characters' perspectives, and 365 Days of Wonder (2014), a collection of precepts. She also created We're All Wonders (2017), a picture book for younger readers, and the graphic novel White Bird (2019), a Holocaust-era story adapted into a film in 2023. Her second novel, Pony (2021), follows a boy's perilous frontier quest to find his father.