The service is probing the killing under the Lacey Act, which bars trading in wildlife that has been illegally killed, transported or sold, the source said on Thursday.
Palmer, whose practice is in suburban Minneapolis, has admitted to killing the 13-year-old lion and tourist attraction, in July. Questions have been raised by the Zimbabwe government and animal conservationists about Cecil's death outside the Hwange National Park, where he was the head of two lion prides.
The best-known lion in Zimbabwe is said to have been lured from the park with bait, shot with an arrow, tracked for 40 hours, shot dead with a rifle and then beheaded and skinned.
Cecil was wearing a GPS collar as part of a research project run by Oxford University.
DRIVE TO END ILLEGAL TRADE
The Obama administration has made a major push to combat wildlife trafficking, issuing a national plan earlier this year to address it and cracking down on domestic trade in African elephant ivory.
With some of the strongest laws in the world to protect endangered species, the US government has attempted to prevent the slaughter of such animals internationally by targeting the multibillion-dollar market for illegal wildlife items.
In 2014, the service proposed listing the African lion as threatened under the US Endangered Species Act. The proposal, which is being finalized, would create a permit process for importing lion trophies from countries that properly manage the species.
Estimates vary on how many lions are left in Africa, with a low end of fewer than 20,000. There has been a significant decline in the African lion population over the past 20 years.
The Lacey Act can be used to prosecute anyone who violates wildlife protections under the Convention on International Trade in Endangered Species (CITES).
The African lion is protected under CITES, which requires exporters of the animal to get a permit from its home country. The lion or its parts cannot be imported into the United States unless it meets CITES requirements.
GOVERNMENT SEEKS HUNTER
Separately, the Fish & Wildlife Service said it has been unable to contact Palmer.
Edward Grace, deputy chief of law enforcement for the service, issued a statement urging Palmer to immediately contact the agency.
A Florida newspaper reported on Wednesday that reporters had gathered around a $1.1 million home in southwest Florida thought to belong to Palmer. It was unclear whether he was there or even in the United States.
Cecil's death has sparked global outrage, with intense social media reaction against Palmer, protests outside his practice, and calls for him to be extradited to Zimbabwe to face poaching charges.
The White House said on Thursday it would review a public petition to extradite Palmer, noting it had exceeded a required 100,000 signatures. White House spokesman Josh Earnest said it would be up to the US Justice Department to respond to an extradition order.
In a Twitter post on Thursday, Fish and Wildlife Service director Dan Ashe called the killing tragic and said his agency would "go where facts lead" in its investigation.
A local hunter has been charged in Zimbabwe with failing to prevent the unlawful killing of the lion. It has been reported that Palmer was with the other hunter and a local farmer during the hunt and that it took place without proper permits and at night.
Palmer has not been charged in Zimbabwe or the United States.
The Obama administration has pushed for tougher penalties for wildlife trafficking crimes and aggressively pursued groups involved in the trade.
In a high profile case last year, the US government indicted a South African company for selling illegal rhinoceros hunts to Americans and secretly trafficking in the endangered animals' horns.
Over the past three years, the US government has made more than 30 arrests involving the rhino horn trade. The government has seized more than $2 million in cash and $1 million in gold as a part of this effort.
