Thousands of officers from across the country lined the streets as his coffin was taken from the Palace of Westminster at 1.30pm, where it laid in rest overnight, to Southwark Cathedral for the funeral at 2pm.
A private cremation followed service, where several officers were expected to take part as ushers.
The Queen gave permission for PC Palmer’s body to rest in Westminster’s Chapel of St Mary Undercroft, an honour normally reserved for heads of state.
Scotland Yard said that full service funerals are normally only held when a police officer or member of staff dies while they are carrying out their duty.
Chief Constable Sara Thornton, head of the National Police Chiefs’ Council, said the scale of the funeral will be unprecedented as officers hold a two-minutes’ silence at 2pm.
She told the BBC’s Victoria Derbyshire Show: “I don’t think we will have ever seen a police funeral of this size.
“Officers from all over the country are coming to London to join their Metropolitan Police colleagues to line the route.
“But at 2pm outside police stations across the country, officers and staff will be observing a two-minutes’ silence.
“We all want to pay honour to the ultimate sacrifice that Keith made.”
PC Palmer’s name was added to the roll of honour and remembrance at a ceremony at the National Police Memorial on The Mall, central London, complete with a guard of honour, hours before his funeral.
Steve Lloyd, of the Police Roll of Honour Trust, said: “It is right that the men and women of the British police service who have paid the ultimate price in the service of this county be remembered here at the national memorial on this record of historical importance.
“We hope that knowing their loved one’s name are to be forever remembered will bring some small comfort to the families of the fallen officers.”
The name of former Pc Gareth Browning was also added after he died aged 36 more than three years since being seriously injured when he was hit at high speed by a stolen car while on duty.
Four people were killed and dozens of others injured in the 82-second atrocity on Wednesday March 22, which ended with Masood being shot dead by armed police.
Andreea Cristea, 31, Leslie Rhodes, 75, Kurt Cochran, 54, and Aysha Frade, 44, died after he ploughed into pedestrians on Westminster Bridge.
Top pic: PA