The Italian giants hit the road in eighth, nine points adrift of fifth-placed Napoli, who occupy the last European spot.
It seems likely that Filippo Inzaghi's men will not be involved in continental football next season but Paletta - a January transfer window arrival from Parma - said it is still possible.
"We can't give up on it [Europe]," Paletta told Sky Sport Italia.
"There are still 10 games to be played. If we perform the way we did in the last few matches, in which we improved a great deal, then we'll win more of them than we'll lose.
"[Filippo] Inzaghi believes in it no less than we do. We're the ones who take to the pitch, and if we play together we can make it."
Milan have lost just one of their last six and beat struggling Cagliari 3-1 last time out thanks to a double from France attacker Jeremy Menez.
Menez has been absolutely crucial this term for a Milan side who have struggled for goals, with the 28-year-old weighing in with 15.
Palermo sit 11th in the table and will be full of confidence after winning 2-0 at Milan earlier this season. Highly-rated forward Paulo Dybala scored in that victory.
The 21-year-old has netted 12 goals in 27 matches this season, form that has seen him linked with big-money moves to a host of European clubs.
And Paletta feels that stopping Argentinean duo Dybala and Franco Vazquez will be crucial in Milan's bid for victory.
"I know Dybala and Vazquez well and they were decisive back in Argentina, too," he said.
"They're two strong players, they know each other well, and they co-operate on the pitch.
"On Saturday, we'll have to keep an eye open for them because they're the two most important players for Palermo."
Palermo have lost just one of their last eight home matches against Milan in all competitions, winning five.
They are just three points behind Milan and will be eyeing a top-half finish, but are in dreadful form of late.
Giuseppe Iachini's side will have welcomed the international break after a winless run of five - which featured three defeats.
