Palo Duro Canyon is part of the escarpment system that forms the eastern boundary of the Llano Estacado or Staked Plains. The Staked Plains in this area is a nearly-level to gently-rolling terrain covered with a mantle of calcareous loess (a wind-blown silt) that has given rise to deep soils with a clay-loam surface and a clay subsoil. These soils are ideally suited to the growth of short grasses, especially blue grama and buffalo grass. Mesquite, yucca, prickly pear cactus, and forbs are common invaders of overgrazed areas.

Many shallow lake basins (playas) dot the plains with a flora different from the surrounding areas. In the playas, plains grasses are displaced by forbs that are suited to withstand the prolonged flooding within the shallow basins.

Near the canyon, the deep soils can be seen grading into shallow, grayish-brown, gravelly-loam soils. The abundance of grasses decreases and mid grasses such as little bluestem and sideoats grama increase. The mid grasses are better able to absorb nutrients from the less fertile soils near the canyon rim than are the short grasses. Especially conspicuous are increasing numbers of shrubs, particularly the evergreen and scale-leaved junipers. Just along the rim of the canyon, the shrubby mountain mahogany is found.

The rugged terrain of the sides of the canyon, extending from the Ogallala downward through the Trujillo and Tecovas formations to the upper part of the Quartermaster Formation, shows a variety of soil types. On the steeper slopes, plants are unable to gain a foothold as erosion removes soil material as fast as it is formed. On less-steep areas, the well-drained escarpment soil is suited for the development of scarp woodland. The deep, woody roots of trees and shrubs are better able to obtain the deeply infiltrating moisture from these soils than are the shallow and fibrous roots of grasses. The common plants on the level areas are junipers, squaw-bush, and little-leaved sumac. On the drier slopes, feather peabush, catclaw, and salt-bush are found. Groves of oak occur, but not in the abundance found along the escarpment further to the south.

Below the canyon slopes and extending to the creek are a wide variety of soils and a great diversity of plants. Most of the plants of the plains and escarpment are found here. Some of the soils of the nearly level areas are deep, high in fertility, and hold large amounts of water. Tall grasses, such as indiangrass and switchgrass, occur admixed with mid grasses; a rank growth of vine-mesquite grass often occurs in the areas where runoff water collects; and alkali sacaton grass grows on saline soils. Other trees and shrubs include hackberry, soapberry, wafer ash, button bush, foresteria, and Texas buckthorn. Along the creek, cottonwoods, willows, and salt cedar are common.