We present an analysis of the radial dependence of the stellar mass function in the diffuse outer-halo globular cluster Palomar 14. Using archival HST/WFPC2 data of the clusters central 39 pc (corresponding to ~0.85*r_h) we find that the mass function in the mass range of 0.55 to 0.85 solar masses is well approximated by a power-law at all radii. The mass function steepens with increasing radius, from a shallow power-law slope of 0.66+/-0.32 in the clusters centre to a slope of 1.61+/-0.33 beyond the core radius, showing that the cluster is mass-segregated. This is seemingly in conflict with its long present-day half-mass relaxation time of ~20 Gyr, and with the recent finding by Beccari et al. (2011), who interpret the clusters non-concentrated population of blue straggler stars as evidence that dynamical segregation has not affected the cluster yet. We discuss this apparent conflict and argue that the cluster must have either formed with primordial mass segregation, or that its relaxation time scale must have been much smaller in the past, i.e. that the cluster must have undergone a significant expansion.