Palekar made his debut in 1971 with the Marathi film Shantata! Court Chalu Aahe directed by Satyadev Dubey, which started the New Cinema Movement in Marathi. In 1974 he was cast as an actor by Basu Chatterjee in Rajnigandha, and in the surprise low-budget hit, Chhoti Si Baat. This led to many other such roles in "middle-class" comedies, mostly alternative. These were mostly directed by Chatterjee or Hrishikesh Mukherjee and included films such as Gol Maal and Naram Garam. He won the Filmfare Best Actor Award for Gol Maal.