The 22-year-old striker gave Milan a lead they would never surrender from the penalty spot at the San Siro before netting his seventh goal in Rossoneri colours midway through the second half.
Napoli's nervy win over Atalanta assured them their hold on second place for the time being but, after going 11 games unbeaten, Balotelli and his Milan colleagues are gunning for a grandstand finish to the season.
The Italy international told acmilan.com: "We have to think one game at a time and not look at any of the other teams.
"We want to win all our matches from here to the end of the season. I'm here to win and I have to do all I can to make sure this team wins.
"If I play I try and score and if I don't play, I try and build up my team-mates, some of them are even younger than me."
The priority for Milan head coach Massimiliano Allegri was restoring his players' confidence after the club were unceremoniously dumped out of the Champions League at Barcelona on Wednesday.
The Catalan giants, led by Lionel Messi, overturned a two-goal deficit to progress to a quarter-final meeting with Paris St Germain on the back of a 4-2 aggregate win.
"The players put the match against Barcelona behind them and I think the team deserved this win for how they managed the game," he said.
"This was a good step towards getting to second place even though it'll be tough. There are nine games left and we need to stay calm and maintain balance.
"We'll be looking to win or at least draw the remaining games. All the games are important."
Whatever happens between now and the end of the season, Milan's status in the top flight is assured, but Palermo are circling relegation to Serie B after nine years.
Returning coach Giuseppe Sannino must restore dignity to Palermo's season while insisting the Rosanero can still overturn a five-point gap on 17th-placed Genoa.
He told La Repubblica: "We came to Milan fully aware of the gap that separated the two teams.
"I wanted to see the guys' attitude and see that my team was alive and in that regard I am satisfied.
"Therefore, I believe we can do well in the next nine games and, you can call me crazy if you like, but I think we can stay up."