1985–1989: The Power Station and MTV success
When Duran Duran went on hiatus, guitarist Andy Taylor and bassist John Taylor joined former Chic drummer Tony Thompson and Palmer to form the Power Station. Their album The Power Station, recorded mainly at the New York recording studio after which the band was named, with overdubs and mixing at Compass Point Studios in Nassau, reached the top 20 in the UK and the top 10 in the US. It spawned two hit singles with "Some Like It Hot" (US number 6) and a cover of the T. Rex song "Get It On (Bang a Gong)", which peaked one position higher than the original at US number nine. Palmer performed live with the band only once that year, on Saturday Night Live. The band toured and played Live Aid, with singer Michael Des Barres after Palmer bowed out at the last moment to go back into the recording studio and further his solo career.
Some critics described Palmer's abandonment of the tour as being unprofessional. In Number One magazine, he countered the claims that he joined the band for money: "Firstly, I didn't need the money and, secondly the cash was a long time coming. It wasn't exactly an experience that set me up for retirement." He also was accused of ripping off the Power Station sound for his own records. He responded, "Listen, I gave the Power Station that sound. They took it from me, not the other way around."
Palmer recorded the album Riptide at Compass Point Studios in 1985, recruiting Thompson and Andy Taylor to play on some tracks plus Power Station record producer Bernard Edwards, who worked with Thompson in Chic, to helm the production. Riptide featured the single "Addicted to Love", which reached number 1 in the United States and number 5 in the United Kingdom. The single was accompanied by a memorable and much-imitated music video, directed by Terence Donovan, in which Palmer is surrounded by a bevy of near-identically clad, heavily made-up female models simulating musicians. Donovan also directed videos for the hits "Simply Irresistible" and "I Didn't Mean to Turn You On". All three videos contain similar elements, with women in heavy makeup and with near identical clothes and appearances. In September 1986, Palmer performed "Addicted to Love" at the 1986 MTV Video Music Awards in Los Angeles. In 1987, he won the Grammy Award for Best Male Rock Vocal Performance for "Addicted to Love". At the 1987 Brit Awards, Palmer received his first nomination for Best British Male Solo Vocal.
Another single from Riptide, his cover of Cherrelle's "I Didn't Mean to Turn You On", also performed well (US number two, UK number nine). Another song, "Trick Bag", was written by one of his major influences, New Orleans R&B artist Earl King.
Concerned about the rising crime rate in Nassau and having landed a deal with EMI, Palmer moved to Lugano, Switzerland in 1987 and set up his own recording studio. Producing Heavy Nova in 1988, Palmer returned to experimenting this time with bossa nova rhythms, heavy rock and white-soul balladeering. He repeated his previous success of "Addicted to Love" with the video of "Simply Irresistible", again with a troupe of female dancers in heavy makeup. The song reached number two in the US and was Palmer's final top ten hit there. The ballad "She Makes My Day" also proved to be a hit in the UK, peaking at number 6. In 1989, he won a second Grammy for "Simply Irresistible", which would later be featured in the Tony Award-winning musical Contact. At the 1989 Brit Awards, Palmer received his second nomination for Best British Male Solo Vocal, and "Simply Irresistible" was nominated for Best British Single. Rolling Stone magazine voted Palmer the best-dressed rock star for 1990.