Incumbent Palau President Surangel Whipps Jr claimed victory Monday in national elections, keeping the pro-US leader in power as China seeks greater influence across the Pacific.
Over his four years in office, Baltimore-born Whipps has overseen the swift expansion of US military interests across the Palauan archipelago.
The Melanesian microstate of around 20,000 people is one of the few remaining countries to maintain diplomatic links with Taiwan, a posture that has angered China over the years.
"I am deeply humbled by the trust you have once again placed in me," Whipps said in a statement.
"Your decision to grant me a second term as president is a responsibility I hold with the utmost respect."
Whipps' sole rival for the presidency was his brother-in-law, Tommy Remengesau Jr.
Remengesau, himself a former president, has warned that drawing too close to Washington could paint a target on Palau's back.
Whipps said he would now focus on bolstering Palau's inflation-battered economy and stepping up environmental protections.
Palau's economy has struggled to recover from an ongoing diplomatic spat with China.
In 2017, China unofficially banned its nationals from visiting tourism-dependent Palau, after it refused to break with Taiwan and forge links instead with Beijing.
Deprived of tens of thousands of Chinese visitors each year, Palau's has struggled to find other sources of jobs and cash.
"I know the challenges we face are significant, but so are the opportunities," Whipps said.
"We have made strides in preserving our environment, strengthening our economy, and improving the lives of all Palauans."
Whipps has overseen the ongoing construction of a long-range US radar system based in Palau, a tropical archipelago of limestone islands and coral atolls about 800 kilometres (500 miles) east of the Philippines.
He also mooted further buttressing the nation with US-made "Patriot" missile defences, an idea that stalled after it was rejected by other lawmakers.
"I always say that presence is deterrence," the 56-year-old has said previously.
Whipps has also been a persistent China sceptic, accusing Beijing of meddling in the presidential vote and orchestrating hacks of government computers.
Remengesau, 68, has meanwhile criticised the lack of transparency surrounding these US military deals, cautioning that tiny Palau should not risk China's ire by giving Washington free rein.
Palau gained independence in 1994 but allows the US military to use its territory under a longstanding "Compact of Free Association" agreement.
In return, the United States gives Palau hundreds of millions of dollars in budgetary support and assumes responsibility for its national defence.
Kathryn Paik, a former Pacific expert on US President Joe Biden's National Security Council, said "heavy bi-partisan" support for Palau would likely continue throughout Donald Trump's incoming administration.
Strong ties with Palau gave Washington "unilateral defense access across a critical swathe of the northern Pacific," she said.
