Dan Hulse has been promoted from managing director and planning partner to the newly created role of chief strategy officer.
Palmer will take over the day-to-day running of account management and lead the Shop Direct account.
He joins the agency’s existing management team, which comprises: Neil Henderson, the chief executive; Al Young, the executive creative director; and Julian Vizard, the creative partner.
Palmer began his advertising career at St Luke’s in 1998 and stayed at the agency for seven years.
He also had stints at TBWA\London, where he was the head of account management, and Leo Burnett.
Henderson said: "Ed is one of the smartest account guys out there. His experience in delivering major multichannel campaigns will play a vital role as we expand to meet our ambitious growth plans. It will be great to welcome him back."
Palmer started at M&C Saatchi as a business director in 2011 before becoming a managing partner in 2013. He oversaw Transport for London’s "get ahead of the Games" campaign for London 2012 and led the integrated Royal Bank of Scotland and NatWest account.
He said: "St Luke’s is on fire. The opportunity to join a place that has such energy, with a management team I’ve known for the last 18 years, was too good to pass up."
Last week, Strongbow moved its advertising account to Adam & Eve/DDB after ten years with St Luke’s.