The study investigated the impact of competition and marketing channels on the market performance of the palm oil industry in Osun State, Nigeria. A total of 211 marketers from the palm oil industry were selected using two-stage sampling techniques. Data collected were analyzed using suitable tools such as descriptive statistics, market structure-conduct performance paradigm, market efficiency analysis, and fractional response model. Results show the value of the Gini coefficient (0.56) for palm oil marketers indicated a high level of inequality and that the palm oil industry in Osun State is relatively highly concentrated, hence an imperfectly competitive market. The result shows that eight sales channels are in operation in the industry. Furthermore, the study reveals that the palm oil industry in Osun State is inefficient. The fractional response model shows that market share, cost of purchasing, market cost, volume of palm oil losses and quantity hoarded are the significant factors influencing the marketing efficiency of palm oil marketers in the study area. The study concludes that the palm oil industry in Osun State is currently imperfectly competitive and inefficient. The study also suggests that palm oil marketers should organize into cooperatives so that they can pull enough of their resources to buy storage facilities and a potential vehicle to transport the palm oil from the rural market to the warehouse for storage, which will increase marketing revenue and lower transportation costs. Additionally, the study suggests that palm oil marketers be given credit access to expand their operations.