Palladium is an element originally used by Howard Stark on the Arc Reactor powering the Stark Industries Headquarters. Tony Stark also used it originally for his miniaturized arc reactor, but when it began to poison and slowly kill him, he replaced it with a new element he managed to synthesize using his father's old notes.
By 1947, Howard Stark was planning to build a palladium core and had the blueprints on a table in his home in Los Angeles; Whitney Frost, a genius scientist herself, saw the plans and thought of how ingenious Stark was.
Tony Stark was using palladium as the core for his Arc Reactor, but it was increasing his blood toxicity. After searching for every known element, he still could not find one that would not get destroyed, so he had to remain with palladium (which lasted the longest, compared to the others).
Natasha Romanoff, aware of this problem, informed Nick Fury of his condition. When the three of them met at Randy's Donuts, Romanoff injected Stark with lithium dioxide to slow his poisoning. Fury provided Stark with some of his father's old things. He discovered an element that could fulfill his needs through a hidden message. He proceeded to re-create this new element (using the molecular structure provided by his father) and created another arc reactor that cured his palladium poisoning. Tony Stark continued to use that reactor and found that it is more powerful than the original arc reactor that relied on palladium.