Palomar 3 was discovered by A.G. Wilson (1955) and named by him the Sextans Globular Cluster, together with Palomar 4, Palomar 5 and Palomar 13. G.O. Abell (1955) cataloged them with their Palomar numbers.
Apparently unaware or unsure about its classification as a globular, it was temporarily taken for a nearby dwarf galaxy, of elliptical or spheroidal type, named the Sextans C system, and suspected to be a Local Group member candidate because of its resolution into stars.
Palomar 3 is situated at a separation of only 4 degrees from a dwarf satellite galaxy of our Milky Way, the Sextans Dwarf, which was discovered only in 1990 because of its low surface brightness, and is roughly at the same distance. While the physical distance of these two objects is only about 30,000 light-years, no evidence was established to now for a physical connection. The radial velocities of these objects seem to differ significantly: While globular cluster Palomar 3 is receding from us at 83.4 km/s, the Sextans Dwarf is receding as 238 km/s; these results support the assumption that the systems are independent of each other.
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