This study conducts an Optimality-Theoretic analysis on palatalization phenomenon in Mandarin loanwords borrowed from American English based on transliterated American state and city names. Because of the differences between Mandarin and American English in sound inventories and syllable structures, words introduced to Mandarin from American English may need to undergo some feature change. The present study focuses on the palatalization phenomenon of velar consonants, and the constraint-based theoretical framework provides an explanation. The constraints and their ranking accounting in this study are: 1) *COMPLEX, *VELAR-V(+front), MAX, IDENT(dorsal) >> IDENT(place), 2) *[PALATALIZATION-V(+low, +front)-n]SYLL, DEP >> *VELAR-V(+front) >> IDENT(place). However, some other factors besides phonological ones, such as character choosing, and translation conventions, may lead to some counterexamples, and thus may need to be further studied.