A method and apparatus of video coding using palette coding mode including run modes are disclosed. In one embodiment, the system determines a maximum palette run for a current pixel being coded based on coding information including block size of the current block, pixel location of the current pixel, and whether a last run type for the current block is the copy-index mode or the copy-above mode. The current run associated with the current pixel is then encoded into one or more binary strings or decoded from the bitstream according to the maximum palette run. A syntax element to indicate the last run type for the current block can be signaled or parsed from the bitstream.