The former Emmerdale star and Daniel Whitson had scored their highest points total of 21 for their routine to 'Don't Cha' by the Pussycat Dolls.
The pair lost in the dance-off against Zoe Salmon and Matt Evers, who were saved by all five of the judges.
Pallett said: "It's honestly been the most amazing experience. I can't believe we made it this far, so thank you to everyone who kept me in."
Judge Jason Gardiner said that, despite the unanimous decision, it was "perhaps the closest [skate-off] we've ever had".
Ray Quinn and Maria Filippov again topped the leaderboard, scoring 26 points for their routine to Robbie Williams's take on the jazz standard 'Have You Met Miss Jones?'.
However, Gardiner admitted that he was "a bit disappointed" with Quinn's performance.
"This should have been a week when you excelled and took to it like a duck to water. However, there were lots of things you were fluffing tonight," he said.