Palau's National flag was first used on 1st January 1981. When the island group separated from the United Nations Trust Territory it adopted the Trust's flag. The blue on the flag is used to represent the ocean and the Nations within it. Whilst this put Palau in common with the Micronesia and other neighbouring island groups. It is also similar to the Bangladeshi flag as it contains the off centre disc, which in this case is yellow. The current flag was introduced in 1981 when Palau became a republic.

The off-centre golden disk is meant to represent the full moon. In palau when there are full moon's they consider these times to be the optimum time for human activity. In these times they celebrate, harvest, plant, fish and care out traditional canoes. The moon is a symbol of peace, love and tranquility to the Palauan people.