It isn't the only nation leading the way, with Hawaii revealing in 2018 it was also legislating a ban against sunscreen that contained the toxic chemicals. The law comes into effect from January 1, 2021.
It is hoped by banning sunscreens that contain these chemicals, Hawaii can save its damaged coral reefs and set a new "gold standard" for the world to follow.
Palau's President Tommy Remengesau said: "We have to live and respect the environment because the environment is the nest of life," the BBC reports.
The nation's leader said the decision was based on scientific reports that showed the toxic chemicals had been found throughout the reefs and in the tissues of fish who lived there.
"When science tells us that a practice is damaging to coral reefs, to fish populations or to the ocean itself, our people take note and our visitors do too," Mr Remengesau said.
"We don't mind being the first nation to ban these chemicals, and we will do our part to spread the word."
Banned sunscreens will be confiscated from tourists who carry them into the country, and merchants selling the banned products will be fined up to $1395.
While sunscreen itself isn't banned per se, products that contain "known environmental pollutants" are, according to The International Coral Reef Foundation.
The environmental protection agency said 10 known ingredients in sunscreen had been found to be "incredibly toxic to juvenile stages of many wildlife species".
What chemicals in sunscreen are banned?
Oxybenzone (benzophenone-3)
Ethyl paraben
Octinoxate (octyl methoxycinnamate)
Butyl paraben
Octocrylene
4-methyl-benzylidene camphor
Benzyl paraben
Triclosan
Methyl paraben
Phenoxyethanol
Source: International Coral Reef Initiative
