The 26-year-old joined the west London outfit from Instituto in 2009 but an injury-blighted spell at the club has seen him fail to secure a regular spot.
He becomes the latest player to be cast aside by new manager Harry Redknapp, who is looking to revamp the Rs' squad in a bid to stay in the Premier League this season.
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The midfielder, who has made 111 appearances for the Loftus Road outfit, scoring just five goals in that time, becomes the third Argentine to switch England for Palermo in the window after Mauro Boselli and Mauro Formica both left Wigan and Blackburn respectively earlier in January.
Redknapp had indicated that he would have liked to keep Faurlin at the club but, with the player desperate for first-team action and a number of other faces possibly arriving, the departure was inevitable.
QPR have been one of the most active teams in the January window with Ryan Nelson, Anton Ferdinand, Djibril Cisse and Rob Hule among those who have been loans out.
Meanwhile Christopher Samba is set to join the revolution, with Peter Crouch's arrival looking increasingly likely, while South Korean left back Yun Suk-Young signed on Wednesday.