2005: two-year-old season

On his first racecourse appearance, Palace Episode contested a six furlong maiden race at Catterick Racecourse on 20 July and started at odds of 4/1 in a ten-runner field. He was restrained in the early stages by his jockey Neil Callan before taking the lead a furlong out and winning "comfortably" by a length from Johannes.^[10] Kieren Fallon took over the ride when the colt was stepped up in class and started a 16/1 outsider for the Listed Acomb Stakes at York Racecourse in August. After tracking the leaders he was switched right to race down the wide outside in the straight, took the lead well inside the final furlong and won by a length and a quarter from Araafa.^[11] Palace Episode was moved up again in class and distance for the Group Two Royal Lodge Stakes over one mile at Ascot Racecourse on 25 September. With Callan back in the saddle he stayed on well in the straight without looking likely to win and finished third behind Leo and Kilworth.

Despite his defeat at Ascot, Palace Episode was stepped up to Group One level for the Dewhurst Stakes at Newmarket Racecourse on 15 October. Starting a 25/1 outsider he took the lead approaching the final furlong but was overtaken in the closing stages and finished fifth behind Sir Percy, Horatio Nelson, Opera Cape and Red Clubs. The colt contested his second Group One in seven days when he started at 20/1 in a seven-runner field for the Racing Post Trophy at Doncaster Racecourse a week later. The Irish stable of Aidan O'Brien had three representatives: the favourite Septimus (winner of the Beresford Stakes), Dylan Thomas and Arabian Prince. The other three runners were Kilworth and the maiden race winners Winged Cupid and Best Alibi. Neil Callan settled the colt just behind the leaders as Winged Cupid set the pace, before making a forward move just after half way. He overtook the leader inside the last quarter mile and stayed on to win by one and a half lengths from Winged Cupid with Septimus in third.^[12]

Kevin Ryan, who had trained his first Group One winner when Amadeus Wolf won the Middle Park Stakes less than a month earlier said, "I was probably a bit easy on him before his run in the Dewhurst Stakes last week but it has come good today. It's been unbelievable this year, especially with the two Group One winners we have had. The team at home have worked very hard and are getting the results. It's very lucky for a trainer like me to get horses like these. I'm going to enjoy it while it's happening. These horses don't come along very often".^[13] Commenting on Palace Episode's prospects he added "He's a very good horse who is entitled to go for very good races. He'll definitely stay a mile and a half and we'll just have to see how he matures over the winter. And if we think the Derby, or even the Guineas, will be for him, than maybe that's where we'll end up".^[14]

2006: three-year-old season

Before the start of the 2006 season, Palace Episode was acquired by Sheikh Mohammed's Godolphin Racing organisation and joined the training table of Saeed bin Suroor.

On his first appearance for his new connections, Palace Episode contested the Dante Stakes (a major trial race for The Derby) over ten and a half furlongs at York in May and started second favourite behind Septimus at odds of 100/30. Ridden by Frankie Dettori he led in the early stages before settling in second but weakened rapidly in the straight and was virtually pulled up in the final furlong to finish tailed-off last of the six runners.^[15] Godolphin's racing manager, Simon Crisford, offered no immediate explanation for the colt's performance.^[2]

Later career

In March 2007 Palace Episode was transferred North America where he remained for the rest of his racing career. Saeed bin Suroor remained as his official trainer, but the day-to-day handling of the horse was managed by Rick Mettee.^[16] After finishing seventh on his seasonal debut at Belmont Park he recorded his only win of the year in an allowance race at Saratoga Race Course on 15 August. He then finished third to Trippi's Storm in the Grade II Kelso Handicap but finished unplaced on his last two starts of the year.^[17]

As a five-year-old, Palace Episode made only three appearances, finishing third in an allowance at Gulfstream Park in January before running unplaced in the Gulfstream Park Turf Handicap in February and an allowance at Keeneland in April. In 2009 Palace Episode entered the ownership of Jack Dorrian, with Andrew McKeever taking over as his trainer. The horse failed to win in three starts, finishing seventh and second in two allowances at Churchill Downs in June and fourth in a similar event at Arlington Park in July.^[17]