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Palladium was an element that was used by Tony Stark, in the movie Iron Man 2, to create the normal miniaturized arc reactor, as the Palladium element was able to sustain the energy that was used for the Iron Man suits. In later models, the palladium ring used in the initial design was replaced by a rectangular palladium core in order to allow it to be swapped out once it suffered too much neutron damage.
Using palladium in an arc reactor contained inside the body turned out to be poisonous, as the material leached into Tony's bloodstream and caused heavy metal poisoning. Tony searched in vain for a material that could replace it in the arc reactor, but failed to find one until he re-discovered the specifications for Vibranium (eka-palladium).
In Iron Man, Tony uses Palladium as the main power source to stabilize the Arc Reactor he created as a replacement for his car-battery powered electromagnet attached to his chest.
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