Palés Matos was born in Guayama, Puerto Rico into a family of well known poets which included both his parents, Vicente Palés Anés and Consuelo Matos Vicil and his brothers and sisters, Vicente, Gustavo, Consuelo and Josefa. His family was instrumental in his poetic development and is reflected when at the age of 17 he wrote and published his first book of poetry titled "Azaleas", a collection of his poems. In high school he became the editor of the school's monthly publication "Mehr Licht". His family's financial situation wasn't a good one and he was forced to drop out of high school and earn a living working in various jobs.

In 1918, he moved to the town of Fajardo where he worked for El Pueblo, the town's local newspaper. There he met a young lady by the name of Natividad Suliveres and soon married her. Natividad gave birth to a baby boy, but within a year she died. Palés Matos was devastated and expressed his grief in the poem "El palacio en sombras" (The palace in shadows). He moved to San Juan and worked for the daily newspapers, El Mundo and El Imparcial. In San Juan he met and befriended Jose T. de Diego Padró, a fellow poet and together they created a literary movement known as "Diepalismo", a name derived from the combination of their surnames.

In 1926, a local newspaper La Democracia published "Pueblo negro" (Black Town), the first known Afro-Antillano poem. This was the beginning of a new genre of Latin American literature which blended words from the Afro-Caribbean culture into the Spanish verse of Puerto Rico. The poems were immediately and vitriolically criticized by white, mainstream Puerto Rican intellectuals who did not agree that black issues were noteworthy or appropriate topics for high literature. In 1937, Palés Matos published Tuntún de pasa y grifería (Drumbeats of Kinkiness and Blackness). This collection of poems was highly acclaimed by some and received an award of recognition from the Puerto Rican Institute of Literature. Palés Matos gained fame with his literary work but, the experience was bittersweet. Though Palés Matos is considered, together with the Afro-Cuban poet Nicolás Guillén, the father of the "Negrismo" movement, he was also criticized by some the black community, who considered it an insult to their race that Palés Matos, a white (light-skinned) man, was becoming famous on their account. Nevertheless, renown black Puerto Rican performers such as Sylvia del Villard and Juan Boria recited and immortalized Palés Matos's poetry.

Some of Palés Matos' works are:

• El palacio en sombras (The Palace in Shadows)
• Pueblo negro (Black Town)
• Danza negra (Black Dance)
• Canción festiva para ser llorada (A festival song to cry for)
• Falsa canción de baquiné (False Song of a funeral for a child)
• Largarto verde (Green Lizard)
• Tuntún de pasa y grifería (Drumbeats of kinkiness and blackness)

In 1957, his written work, "Poesías" was acclaimed by the Academy of the Spanish language. Palés Matos was selected by the faculty of the University of Puerto Rico as their conference representative. Palés Matos died of heart failure in San Juan on February 23, 1959.

The government of Puerto Rico honored the memory of Palés Matos by naming a high school in the town of Bayamón and a public housing complex in Guayama after him.

By the late 1970s, Juan Boria, a Black Puerto Rican public school teacher and bookbinder generated renewed interest in Palés Matos by making vinyl disk recordings of his poetry. In 1998, island novelist Giannina Braschi published the bilingual novel "Yo-Yo Boing!" featuring scenes honoring the musicality of Palés Matos's works and his contribution to Puerto Rican poetry. In December 2009, Banco Popular de Puerto Rico...for their annual Christmas-time cultural production...released cd and dvd versions of Palés y la rumba de esquina, a tribute to Palés Matos' poetry. The production features several Palés Matos poems set to music and interpreted by various artists and musical groups. The dvd includes period costumes and settings, as well as a film technique which mimics the black-and-white silent film medium.