The Tractor Boys are optimistic that they can agree a deal for the 27-year-old midfielder in the coming hours, per Fabrizio Romano.
It comes as manager Gary O'Neil looks to bolster his midfield ahead of their return to the Premier League after 22 years away.
Palacios, a World Cup winner with Argentina and Bundesliga champion with Leverkusen, would certainly be a statement signing for Ipswich and O'Neil.
He has made 126 appearances for Leverkusen, scoring 11 goals and providing 15 assists, and has 41 caps for Argentina respectively.
The Leverkusen midfielder's current contract runs until the summer of 2030, and it has been reported that the German side had qouted a €35 million asking price for his signature.
If The Blues can get the deal over the line, Palacios would become their 13th signing of the summer window, as they rapidly approach the £200 million mark on transfer spending.