Palin described herself as being part of a "team of mavericks" led by McCain who would bring change to the White House.
The two also clashed on tax policies with both claiming that they would cut tax, and energy, with Palin calling for more drilling to utilise US energy resources.
Follow the debate live on Al Jazeera's Twitter service
Palin later accused Biden of raising "the white of flag of surrender" in Iraq over the Democrat policy of withdrawing US forces from the country.
Biden said the Republicans were not offering a plan to end the conflict, triggered by the US-led invasion of Iraq in March 2003, in which tens of thousands of Iraqis and more than 4,000 US troops have been killed.
"I didn't hear a plan," Biden responded. "Barack Obama offered a clear plan. Ship responsibility to Iraqis over the next 16 months. Draw down our combat troops."
The debate focused heavily on foreign policy, reportedly a weak point of Palin's.
Both candidates discussed Afghanistan, Pakistan and Iran as well as pledging their support for Israel.
Biden later lashed out at Dick Cheney, the current vice-president, calling him "the most dangerous vice-president in American history".
Thursday's debate comes after a poll found that most US voters have huge doubts about Palin's experience and ability to lead.
"Six in 10 voters see her as lacking the experience to be an effective president, and a third are now less likely to vote for McCain because of her," the Washington Post said of its joint poll with ABC News.
And McCain's campaign, which has stalled in the wake of the global financial crisis, said on Thursday that he had conceded the battleground state of Michigan in order to focus on states where he has a better chance of beating Barack Obama, the Democratic presidential candidate.
"It's been the worst state of all the states that are in play and it's an obvious one from my perspective to come off the list," said Greg Strimple, a senior McCain adviser.
Watching for mistakes
Concerns over Palin's experience have increased since she gave a series of interviews on foreign policy, the economy and the US supreme court.
She has faced ridicule for some of her answers, including citing Alaska's proximity to Canada and Russia as valid foreign policy experience.
Biden, 65, the chairman of the senate foreign relations committee, faces his own set of challenges as he tries to rein in what analysts have said is his tendency to make mistakes and talk too much.
The McCain campaign has launched an online advertisement mocking Biden, highlighting his comments about his own high IQ, the high number of foreign workers in convenience stores and Hillary Clinton's better suitability for his vice-presidential slot.
"Ready to gaffe? Yes. Ready to lead? No," the advertisement says.
Palin and Biden had spent several days off the campaign trail to prepare.
Palin had been at McCain's Arizona retreat and Biden at home in Delaware, although he returned to the senate in Washington to vote for the government's bailout package on Wednesday.
The Biden-Palin encounter follows last week's first presidential debate between Obama and McCain in Mississippi.
Opinion polls judged Obama the winner of that close contest, and the Illinois senator has since maintained his lead in national polls and in key battleground states.
The television audience on Thursday could be the largest for a vice-presidential debate, surpassing the nearly 57 million who watched in 1984 when then vice-president George Bush, the current president's father, debated with Geraldine Ferraro, the first woman vice-presidential nominee for a major party.