As large language models (LLMs) become increasingly integrated into daily life, ensuring their cultural sensitivity and inclusivity is paramount. We introduce PALM, a year-long community-driven project covering all 22 Arab countries. The dataset contains instruction–response pairs in both Modern Standard Arabic (MSA) and dialectal Arabic (DA), spanning 20 diverse topics. Built by a team of 44 researchers across the Arab world—each an author of this paper—PALM offers a broad, inclusive perspective. We use PALM to evaluate the cultural and dialectal capabilities of several frontier LLMs, revealing notable limitations: while closed-source LLMs generally perform strongly, they still exhibit flaws, and smaller open-source models face greater challenges. Furthermore, certain countries (e.g., Egypt, the UAE) appear better represented than others (e.g., Iraq, Mauritania, Yemen). Our annotation guidelines, code, and data are publicly available for reproducibility. More information about PALM is available on our project page: https://github.com/UBC-NLP/palm.