Mass prayers were held to remember victims of the 7.5-magnitude quake and subsequent deluge that razed swathes of the coastal city last September.
Some 4,300 people were listed as dead or missing while nearly 60,000 people are still living in makeshift accommodation after their homes were destroyed, according to the Red Cross.
The force of the impact resulted in entire neighbourhoods being levelled by liquefaction - a process where the ground starts behaving like a liquid and swallows up the earth like quicksand.
The disaster also destroyed fishing boats, shops and irrigation systems, robbing most of the locals of their source of income.
Rebuilding has been slow and tens of thousands of people still living in temporary shelters wonder if they will ever have a home again.
The Indonesian Red Cross estimates 57,000 people in Palu are homeless, and continue to live in camps and temporary shelters.
"We are hoping the government will redouble their efforts to identify settlement areas and help thousands of families," Mr Jan Gelfand, Indonesia head of the International Federation of Red Cross and Red Crescent Societies, said.
"I've been living in this tent since the quake struck," said Ela, a mother of four.
"It's been really hard. My kids got sick, it's hot and sometimes we have to sleep on wet ground after it rains. The kids' father is still working but we can't afford to buy mattresses," she added.
Nani, another mother of four, said the family's home was destroyed in the disaster. "I don't know if I'm going to get permanent housing," she added.
Damaged schools across the region have not been repaired.
Many "are so badly affected they remain too dangerous to use, forcing children to learn in temporary classrooms where they have to attend in shifts due to a lack of space", Save the Children said yesterday.
"Children long for a sense of normality," said Mr Dino Satria from the charity Save the Children Indonesia, which estimated that two-thirds of 1,300 local schools were still damaged.
"They continue to be traumatised by the disaster as they cannot go back to schools, cannot return to their normal routine as a way to help them overcome their trauma," the operation director told the Thomson Reuters Foundation by phone from Palu.
Earlier, the World Bank had offered the country up to US$1 billion (S$1.38 billion) in loans to get the city back on its feet.
Indonesia is one of the most natural disaster-prone nations on earth due to its position straddling the so-called Pacific Ring of Fire, where tectonic plates collide.
The South-east Asian archipelago is also dotted with more than 100 volcanoes, including one that erupted between Java and Sumatra late last year and unleashed a tsunami that killed more than 400 people.
On Boxing Day 2004, a 9.1-magnitude earthquake struck off the coast of Sumatra and triggered a tsunami that killed 220,000 across the Indian Ocean region, including around 170,000 in Indonesia.
Mr Satria urged the authorities to speed up reconstruction efforts, but a local education official said the task was enormous without sufficient funding, although rebuilding schools was a top priority.
"Sadly, we are restricted by a lack of funds. I need an additional US$11 million just to rebuild the schools in Palu city. The task at hand is immense," Palu's head of education Ansyar Suitiadi said in a statement.
AGENCE FRANCE-PRESSE, REUTERS