Palmatine is one of the four main protoberberine alkaloids and is largely employed in pharmacy and medicine as a versatile drug with considerable biological activities. More recently, palmatine has been proposed as a promising DNA phototherapy drug, notably due to its ability to produce in situ singlet oxygen only when interacting with DNA. The fine mechanisms of palmatine-DNA interactions as well as its complicated photophysics are not yet fully understood. In this paper, we identify via molecular dynamic techniques two stable interaction modes between palmatine and B-DNA, namely insertion and minor groove binding, whose structural and electronic bases are analyzed and rationalized. These two competitive modes share the same UV-vis signature and estimated binding free energies, and thus they may indeed coexist. By using hybrid quantum mechanics/molecular mechanics protocols coupled to molecular dynamics, we analyze palmatine excited state properties in water solution and in interaction with DNA. The environmentally controlled production of singlet oxygen is thus rationalized in terms of the competition between local and charge-transfer excited states.