Early Palauans may have come from Australia, Polynesia and Asia. Depending on the thread of the family, Palauans may indeed represent many parts of Melanesia, Micronesia and Polynesia. However, it is traditionally not considered to be Micronesian. According to geneticists, there are two distinctive strains of Melanesian bloodlines: one is associated with indigenous Australians/Papua New Guineans and the other is known to have originated in Asia. There has not been any link established between the two.
In the European and Australian world Belau/Pelew is better known by the name of “The Black Islands”. Vintage maps and village drawings can be found at the Australian library online, as well as photos of the tattooed and pierced Ibedul of Koror and Ludee.
Carbon dating and recent archaeological discoveries have brought new attention to the archipelago. Cemeteries uncovered in islands have shown Palau has the oldest burial ceremony known to Oceania. Prior to this there has been much dispute as to whether Palau was established during 2500 BC or 1000 BC. New studies seem to dispute both of these findings. Moreover, Palau’s ancient trading partner, Java, has also come under close scrutiny since Homo floresiensis was found. Like Flores, remains of small-bodied humans have been found in Palau.
For thousands of years, Palauans have had a well established matrilineal society, believed to have descended from Javanese precedents. Traditionally, land, money, and titles passed through the female line. Clan lands continue to be passed through titled women and first daughters but there is also a modern patrilineal sentiment introduced by imperial Japan. The Japanese government attempted to confiscate and redistribute tribal land into personal ownership during World War II, and there has been little attempt to restore the old order. Legal entanglements continue amongst the various clans
Historians take interest in the early navigational routes of European explorers in the Pacific. There is a certain controversy as to whether Spanish explorer Ruy López de Villalobos, who landed in several Caroline Islands, spotted the Palau archipelago in 1543. No conclusive evidence exists but there are some who think he could have seen the tip of a southernmost island in the group.
Palau had limited relations—mainly with Yap and Java. Had it not have been for ship-wrecked islanders who accidentally took refuge in the Philippines, Europeans likely would not have found a route to Palau until much later. English Captain Henry Wilson also shipwrecked off the island of Ulong in 1783. Wilson dubbed Palau the “Pelew Islands”.
Like the Mariana Islands, the Caroline Islands and the Marshall Islands, Palau was part of the Spanish East Indies, and was administered from the Spanish Philippines until the Spanish-American War of 1898.
In 1885, after Germany occupied some of the islands, a dispute was brought to Pope Leo XIII, who made an attempt to legitimize the Spanish claim to the islands (but with economic concessions for Britain and Germany). Spain in 1899, after defeat during the Spanish-American War, sold the islands to Germany in the 1899 German-Spanish Treaty.
After the Spanish sold the islands to Germany, the Germans began an economic transformation in Micronesia. The Germans began mining bauxite (an aluminum ore), Phosphate, and other resources. The islands were also administered by German New Guinea. Mining continued throughout Micronesia even after the Germans lost the islands to Japan under the terms of the Treaty of Versailles, after World War I. The Japanese continued and expanded the mining operations.
During World War I, under the terms of the Anglo-Japanese Alliance, the Empire of Japan declared war on the German Empire and invaded German overseas territories in the Pacific Ocean, including the Palau Islands. Following Germany’s defeat, the League of Nations formally awarded Palau to Japan as a Class C League of Nations Mandate. 
Under the terms of a “Class C Mandate” Japan incorporated the islands as an integral part of its empire, establishing the Nanyo-cho government.  Initially under Imperial Japanese Navy administration, civilian control was introduced from 1922, and Palau was one of six administrative districts within the Mandate. Japan mounted an aggressive economic development program and promoted immigration by Japanese, Okinawans and Koreans. During this period, the Japanese established bonito (skipjack tuna) production and copra processing plants in Palau.
World War II
Peleliu was the scene of intense fighting between American and Japanese forces beginning September 1944 resulting in an Allied victory, though the cost in human terms was high for both sides. After WWII, the United Nations played a role in deciding the U.S. would administer Palau as part of the Trust Territory of the Pacific Islands. Eventually, in 1979, Palauans voted against joining the Federated States of Micronesia based on language and cultural differences. After a long period of transition, including the violent deaths of two presidents (Haruo Remeliik in 1985 and Lazarus Salii in 1988), Palau voted to freely associate with the United States in 1994 while opting to retain independence under the Compact of Free Association.
There are still roughly 100 American service members listed as Missing In Action (MIA) in Palau since WWII. Since 1993, a small group of American volunteers called The BentProp Project have searched the waters and jungles of Palau to attempt to locate information that can lead to the identification and recovery of remains of these American MIAs.