The 24-year-old Argentine has left Ewood Park to help in the Italian outfit's struggle to remain in Serie A, ending a troubled 18-month stay in England with Rovers
Formica joined Rovers in the summer of 2011 for a bid believed to be around £3.5 million from Newell’s Old Boys, but suffered relegation with the club last season and has not featured in the first-team since December 7.
The Argentine has joined a side that has failed to win any of their last eight league matches and sit second bottom in the Serie A table.
“Palermo announces that it has reached with the Blackburn Rovers Football Club in an agreement for the acquisition of rights to Mauro Abel Formica," the statement read.
“The Argentine footballer, born in 1988, will be available to the Rosanero technical staff from tomorrow and will be presented on Friday.”