The Micronesian country previously hosted the Games in 2005 and plan to refurbish most of their existing facilities over the next few years.
The President of the Palau Olympic Committee, Frank Kyota, said the successful bid was the result of a lot of preparation and hard work over the last 18-20 months.
"We were fully compliant with all the rules and the requirements with respect to the bid, including support from our government to underwrite the Games and also from the sports federations, National Olympic Committee and basically the whole leadership of Palau, whether they are elected or traditional."
The CEO of the Pacific Games Council, Andrew Minogue, said American Samoa first expressed interest in hosting the Mini Games over a year ago but their bid failed to show it had sufficient government support.
"The Board had its strong view that there was only one bid that could be presented to the general meeting so our position was that we essentially asked the members to endorse Palau and confirm them as the hosts," he said.
"American Samoa and one or two others wanted that position to be sort of opened up to a more full bid and vote on the actual Games between the two countries by the President's resolution just to go to Palau was confirmed by a pretty strong majority."
The 2025 host was meant to be decided last year but a decision was deferred because none of the prospective bids, including American Samoa and Niue, were compliant with the Pacific Games Council's statutes and regulations.
Frank Kyota said the Palau government have been has been right behind their bid from day one.
"We need government to step up and do it and in that respect we've been very fortunate because most of our leaders from the executive brand and event traditional community have all been sportsmen or sportswomen at some part of their lives so they know what it takes."
Frank Kyota said Palau will be able to stage the Mini Games in existing venues and says the majority of the upgrades will be complete by the end of next year.
"Next year we're hosting 'Our Oceans 2020' and a lot of the renovations and expansions are being done to the existing facilities, including the gymnasium and the schools, so we see that as a stepping stone towards (hosting the Mini Games). Also our government had appropriated around US$30 million dollars to refurbish all the roads from the airport all the way to the city so fully be then we will be ready," he said.