The former Alaskan governor is closing in on the President at an alarming rate, and she is now just five points behind him according to a new survey.
After trailing Mr Obama by more than 20 percentage points in polls all year, the new McClatchy-Marist survey, taken on September 13 and 14, has the President leading Mrs Palin by only 49 points to 44.
A key reason is that she now leads Mr Obama among independents, a sharp turnaround.
The poll fond that Obama looks increasingly vulnerable in next year's election, with a majority of voters believing he will lose to any Republican, a solid number saying they will definitely vote against him and most potential Republican challengers gaining on him.
Mr Obama still leads all the announced candidates, however.
The biggest gain came for Mrs Palin, who hasn't yet announced whether she will jump into the fast-changing race for the 2012 Republican presidential nomination.
Overall, the gains among Republicans 'speak to Obama's decline among independents generally, and how the middle is not his right now,' said Lee Miringoff, director of the Marist College Institute for Public Opinion, which conducted the national survey.
'This will require him to find ways to either win back the middle or energise his base in ways that hasn't happened so far.'
By a margin of 49 per cent to 36 per cent, voters said they definitely plan to vote against Mr Obama, according to the poll.
Palin, the 2008 GOP vice presidential nominee, has said she would make a decision by the end of this month. One factor driving her decision is that deadlines are approaching in states for candidates to get on the 2012 ballot.
"I think people are still going to be coming and going because there is still time, and I'm still one of those still considering," Palin told Fox News last night.
Whether she seeks the presidency or not, the former Alaska governor said the 2012 election will be an "unconventional" one. Palin is a paid contributor to Fox News.
A new McClatchy-Marist Poll shows Palin has gained in a hypothetical matchup against President Obama, and now trails him 49%-44%. She had been trailing him by more than 20 percentage points in other surveys this year.
But the new survey also found that 72% of Republicans and GOP-leaning independents don't want Palin to run for president.
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