Palsikar made his first film appearance in 1935 along with Leela Chitnis in Sumumar Chatterjee's Dhuwandhar. He appeared in two more films in this decade, Kandan and Durga (1939), both of which were produced under the Bombay Talkies production house and were the two final films directed by German director Franz Osten.
After a long break of 14 years, between which he appeared only in one film Bahurani, (1940), he returned to the screen in Bimal Roy's 1953 picture Do Bigha Zamin (Two Acres of Land), in which he played Dhangu Maheto, alongside actors such as Balraj Sahni and Nirupa Roy. The film was a major critical success and won several national and international honours. He followed it with supporting roles in other successful films of this decade, such as V. Shantaram's Jhanak Jhanak Payal Baaje, Bimal Roy's Devdas, Raj Kapoor's Shree 420, Sombhu Mitra's Jagte Raho and Hrishikesh Mukherjee's Anari.
In 1960 Palsikar appeared in Kanoon, a courtroom drama involving a murder case. Directed by B. R. Chopra, the film saw Palsikar playing Kaalia, a petty thief who is caught and charged with murder for no fault of his own. Palsikar's performance earned him his first Filmfare Award for Best Supporting Actor. In a retrospective review in 2009, The Hindu noted, "the star of the second half is Nana Palsikar, who slips into the role of a petty thief with a commanding performance."
In 1963, Palsikar appeared in Khwaja Ahmad Abbas's Shehar Aur Sapna (The City and The Dreams). It is a social film which portrays the struggle of pavement dwellers in the backdrop of rapid industrialisation. The film, a love story that takes place in a drain pipe, received the President's Gold Medal Award and the National Film Award for Best Feature Film. Palsikar's performance as Johnny earned him his second Filmfare Award for Best Supporting Actor, and he was acknowledged as Best Supporting Actor (Hindi) by the Bengal Film Journalists' Association.
John Berry's Maya (1966) saw Palsikar playing Sajid Khan's father. In 1969, James Ivory cast him in the foreign co-production The Guru. Ivory said, "I didn't know a great deal about him when we cast him... He was said to be a very good actor, which I took on faith." Judith Crist from the New York Magazine described his small part of "The Guru's Guru" in the film as "an unforgettable cameo".
In the 1970s, Palsikar continued to portray father figures or authoritative characters such as judges. For instance he played the role of a father in many films such as B. R. Chopra's Dhund based on Agatha Christie's play, The Unexpected Guest, in 1973 and Yaaron Ka Yaar in 1977. However these roles were generally relatively minor and he was often uncredited for his performances, such as his role as a judge in Jwar Bhata in 1972.
He continued playing a father into the 1980s, appearing in Aakrosh (1980), playing Om Puri's dad. His last major film was in the epic film, Gandhi in 1982, a Richard Attenborough directed biographical film based on the life of Mohandas Gandhi, who led the nonviolent resistance movement against British colonial rule in India during the first half of the 20th century. However his role very minor, playing a villager. His last ever appearance was shortly before his death in 1984 in the film Kanoon Kya Karega, again playing a parent.
He died on 1 June 1984 in Mumbai, aged 77.1962: Filmfare Best Supporting Actor Award - Kanoon
1965: Filmfare Best Supporting Actor Award - Shehar Aur Sapna
1965: BFJA Awards, Best Supporting Actor (Hindi) - Shehar Aur Sapna