The 25-year-old, who can also operate in defence, made 44 league appearances for Walsall last season before his contract at the Banks's Stadium expired.
Palmer, who began his career at Derby, has moved to GIlls on a free transfer.
"Chris is a very versatile player," said boss Mark Stimson. "He can play on either wing or in defence. We've not got the biggest squad so to have a player like that will be a major bonus next season.
"He's been involved in over 40 matches for Walsall last season and that experience at League One will also be a significant asset to the side."