De Sa, a former Moroka Swallows and BidVest Wits goalkeeper who won one international cap with Bafana Bafana, was axed by Wits at the end of last season after five years at the helm which included leading the side to the 2010 Nedbank Cup trophy.
Although the club claimed at the time they were simply seeking a new direction and appointed the Spaniard Antonio Habas to replace De Sa, there were unflattering reports in the media with regards his relationship with his ex-partner that are believed to have contributed to his exit.
Palacios has overseen a poor start to the season for The Buccaneers and the patience of owner Irvin Khoza has finally run out after four games without a win, or even a goal.
Although his resignation from the position has been explained as due to “health reasons”, with the coach apparently suffering from spinal problems, it is likely that this was seen as an opportune moment to remove him from the bench.
The last straw came with a 3-0 League loss to Moroka Swallows on September 1, after which Khoza began searching for a replacement for the Peruvian.
Palacios will now return to his role as head of development at the club, having been elevated to the position of head coach after the axing of Julio Leal in March this year.
De Sa will be reunited with a number of his former players at Pirates, including goalkeeper Moeneeb Josephs, defender Patrick Phungwayo, midfielder Lehlohonolo Masalesa and winger Sifiso Myeni.
Interestingly, De Sa had a very public spat with Pirates’ striker Benni McCarthy after the 2011 Telkom Knockout Final in which Bucs won 3-1 and he is unlikely to welcome the move.