Palou found himself in the eye of a storm when it was announced in July that he would be leaving Ganassi for McLaren Racing after the 2022 season.
The statement landed shortly after Ganassi had announced it had taken up the 2021 IndyCar champion's option for another year, triggering a legal tug of war between the two sides.
Due to the acrimonious fallout, Palou's future was up in the air for two months but, in a stunning turn of events, Palou announced on Wednesday he is now staying put after all rather than join Arrow McLaren SP.
"I’m excited to announce that Chip Ganassi Racing and I have come to an agreement, and I’ll be back in the No. 10 car next season. Looking forward to a BIG 2023!" Palou tweeted.
It was understood that, along with wanting to secure a better contract as an IndyCar champion, Palou's move to McLaren also involved the promise of involvement in the F1 program.
While McLaren moved to sign Alpine protege Oscar Piastri to replace Daniel Ricciardo alongside Lando Norris in 2023, Palou's McLaren testing deal will still continue with Ganassi's approval.
While the 2023 news was released Palou and Patricio O'Ward were testing the 2021 McLaren MCL35M car in Barcelona.
"Alex Palou will remain in the #10 car with Chip Ganassi Racing for the 2023 IndyCar season," a Ganassi statement read.
"The agreement affords him the opportunity to test cars in separate racing series, provided that it does not directly conflict with his IndyCar commitments."
Palou added that he is "grateful that Chip Ganassi Racing will allow me to pursue F1 testing outside of my IndyCar commitments".
"Thank you, Chip, Mike [Hull, Ganassi's managing director] and the entire team for your willingness to work together and help support both the team and my personal goals throughout this process," he said.
Palou dominated last weekend's IndyCar season finale at WeatherTech Raceway Laguna Seca and, after the race, was seen sharing an embrace with team boss Ganassi, suggesting their frosty relationship over Palou's future had thawed.
As of yet it is not known what, if any, settlement Ganassi and McLaren Racing had to reach to resolve the situation.
As a result of Palou staying where he is, Arrow McLaren SP revealed that Rosenqvist will continue on with the team for a second season, alongside Pato O'Ward and Alexander Rossi, who joins from Andretti Autosport.
Rosenqvist had a contract with the McLaren Racing group for 2023 but, due to Palou's impending arrival, it was suggested the Swede would move back to Formula E to race for McLaren's new outfit in the electric championship. That prospect appealed less to Rosenqvist who preferred to stay in IndyCar and so McLaren CEO Zak Brown agreed to let him pursue other options.
However, he also told select media at the weekend, "I'm very happy with Felix. He's done an excellent job this year. He's been strong all year."
Today, Rosenqvist said: "There’s no better way to enter the off-season than with this news.
"I love this team, and I’m so happy to continue working with all the incredible people I’ve gotten to know over the past two seasons.
"With everything the team has in the pipeline, the continuing relationship with Pato and the addition of Alex Rossi, we are going to bring our A-game for 2023."
