In 1827, a post office was built and Palatka replaced Picolata to the North as the major transportation center on the St. Johns River. The army constructed warehouses in Palatka in 1827 where provisions were deposited for further shipment down river and into the interior.
With the Seminole Indian unrest, which began in 1826 the influx of settlers again reversed and the post office was closed in 1829, due to the decrease in population.
In December 1835, Seminoles attacked and burned Palatka and the white settlers from the entire St. Johns River valley fled to the safety of St. Augustine.
In the early 1840s, Fort Shannon was built in Palatka and served as the military headquarters of the Central Florida District. As such it was built as a supply depot and staging area and was not fortified, as were most other forts deeper in the interior. The building at 110 Madison Street, which was moved from 224 North First Street, across from the Holiday Inn, served as the officers' quarters of the fort, and is the oldest building in Palatka.
By 1850, Fort Shannon had been turned over to the civilian population and settlers were once again arriving in large numbers to venture into the Florida interior. By 1850, Palatka's population reached 200.
On April 3, 1851, Robert Raymond Reid bought Palatka for $5,000 intending to subdivide to small parcels; however, he overextended himself and declared bankruptcy. The land was transferred to Issac H. Bronson, Federal Judge for the Eastern Circuit in Florida, who served as trustee.
On January 8, 1853, the City of Palatka was chartered by the State of Florida. During the 1850s Palatka became the major center for transportation, freight, lumber, citrus and tourism on the St. Johns River. The steamboat traffic on the St. Johns and its tributaries, particularly the Ocklawaha, secured Palatka's position as the Hub of the transportation network into and out of central Florida.
During the Civil War the Union forces occupied the town after federal gunboats gained control of tile St. Johns River, but this period had no major impact on the community.