The player has barely been at Ewood Park for 18 months after joining on a £3.5million deal from Newell's Old Boys.
But the 24 year old has not seen any action in a Rovers' shirt since the game with Cardiff at Ewood Park played on December 7th which Rovers lost 4-1.
A statement on Palermo's website read: "Palermo announces that it has reached with the Blackburn Rovers Football Club in an agreement for the acquisition of rights to Mauro Abel Formica.
"The Argentine footballer, born in 1988, will be available to the Rosanero technical staff from Thursday and will be presented on Friday."