A method and apparatus for palette prediction and sharing according to the present invention are disclosed. A method incorporating an embodiment of the present invention determines one or more palette sharing flags for the current block. A set of current palettes corresponding to the set of color components is generated according to the palette sharing flags. If a first palette sharing flag is asserted, one or more current palettes indicated by the first palette sharing flag are copied entirely from one or more reference palettes of a set of reference palettes. If the first palette sharing flag is not asserted, one or more current palettes indicated by the first palette sharing flag are derived from a bitstream associated with the video data. Encoding or decoding is then applied to the current block according to the set of current palettes.