The 50-year-old Swede was coach of Sierra Leone when they competed at the 1996 African Nations Cup finals and has also coached Rwanda.
His last job was with South African premier league club AmaZulu who fired him late last year.
Palmgren replaced Bernard Kaanjuka, who resigned after Namibia lost at home to Malawi in their last World Cup qualifier in March. They have three points from three games in Group F, two behind joint leaders Nigeria and Malawi.
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