He was elected to the State Senate in 1989, defeating the appointed incumbent Democrat John D'Amico, Jr. After taking the office on November 20, he served in a variety of leadership roles. From 1992 to 1993, Palaia was the Assistant Majority Leader and from 1994 to 2003 he was President Pro Tempore of the Senate. In 2002-2003 he was the Republican President Pro Tempore when the Senate was evenly split 20-20. Palaia was a member of the Senate Education Committee. He was one of the sponsors of the New Jersey Childproof Handgun Law that passed in 2002.