Palmer, 82, was playing a friendly round with Dick Ferris, Bill Damron, Bruce Walters and Will Carey.
The Callaway staff pro icon teed up on the 163-yard hole with a brand new Callaway Razr XF 5-iron, the first time he used that set of clubs.
"Wow, that felt good!" said Palmer.
Of his 20 lifetime aces, Palmer made three in PGA Tour events, four on the Senior (now Champions) Tour, and one in Japan. His last hole-in-one came eight years ago, also at Bay Hill. "My first one came at Latrobe Country Club when I was in high school on a short par-3," Palmer recalled. "I think I've made three of the 20 on that same hole. In the early days I was hitting wedges on that hole and now I'm hitting 8-irons."
"It was into a cross-wind from the left. The ball landed 10 feet short and politely rolled up into the hole," Palmer explained. "I enjoyed the new irons very much. It was the first time I used them and I made a hole-in-one, so it was quite a surprise. I'm actually going out to hit some more balls today because I'm excited to play with this new equipment."
The hole-in-one was part of an impressive round of golf. Palmer carded a 79-going out in 40 and coming home in 39-to best his age by three shots, but said the hole-in-one put a dent in his wallet. "It cost me quite a lot of money (at the 19th hole)...and I didn't mind one bit," Palmer quipped.
The golf legend then posed the question, "I wonder how many aces we've all had?"
They have made 50 aces among them.