The restrictions follow complaints from residents of rising rents due to short holiday lets through websites and apps.
Palma's mayor says the ban, to be introduced in July, will be a model for cities suffering with mass tourism.
But business associations say many families will be financially impacted.
It was not immediately clear if the ban was restricted only to private flats advertised by their owners on apps or websites.
Houses and chalets will be exempt from the restrictions unless they are located inside protected areas, next to the airport or in industrial zones.
Photo source: picture from an open source