Palmer laid down a score of 93.11 with his first run in the spectacular setting of Place de la Concorde and that was good enough to finish ahead of American Tom Schaar on 92.23 and Brazil's Augusto Akio on 91.85.
The US-born Palmer had the gold wrapped up before his third and final run, after Schaar failed to catch him with his last attempt.
Palmer set his sights on more gold at Los Angeles in 2028 and Brisbane in 2032, but he warned that it would not be easy.
"Definitely the goal is to do Brisbane because it's where I grew up, it's where I learned to skate," he said.
"But you've just got to keep up with these kids coming through because skateboarding is a young generation sport."
Palmer honed his skills at the same Gold Coast skate park where 14-year-old Arisa Trew, who won the women's park title for Australia 24 hours earlier, practises.
He called them "the king and queen of skateboarding park" and said he was struggling to process his success.
"Being able to say that I'm a two-time Olympian, let alone a two-time Olympic gold medallist, is just a crazy, crazy feeling," he said.
Skateboard legend Tony Hawk watched the final and said Palmer had "a long career in front of him".
"We've seen skaters not even reach their peak of performance until they're into their 30s," he said.
The final was also watched by rapper Snoop Dogg, who gave Schaar a hug after the American had completed his second run.
"I landed my run and I looked up and he was just standing in front of me," said Schaar. "That was pretty cool. Probably the best moment, actually."
Palmer and Schaar were the only skaters to complete their first runs, with the Australian taking the lead after a spectacular performance.
Akio jumped into third with his final run and celebrated by showing off his juggling skills to the crowd with a set of clubs.
Schaar had one chance left to leapfrog Palmer but his promising run ended in a fall.
Palmer also fell on his last run, denying him the chance to showcase tricks that he had been saving for the occasion.
"Those tricks I wanted to do in the contest that nobody's seen me do before -- I was bummed that I couldn't do them but now we can save them for the next time," he said.
