In 1980, Palmateer was traded to the Washington Capitals where he played two seasons. Speaking about the experience Palmateer recalls:
“Playing for the caps and living in Maryland was a fantastic experience, so different from playing in Toronto. Hockey really took a back seat to football and college sports; I hardly was recognized away from the rink. Our team did not have a lot of talent and struggled to get wins, but they were great teammates who competed hard. I have nothing but fond memories despite the lack of success.”
In 1982, Palmateer returned to the Maple Leafs for two more seasons before retiring in 1984.
