Step 1: Recall the institution.
The Kerala Forest Research Institute (KFRI) is a premier research institution that conducts scientific research on forests, biodiversity, and natural resources of Kerala.
Step 2: Identify the location.
KFRI is located at Peechi in Thrissur district, Kerala. It was established in 1975 and functions under the Kerala State Council for Science, Technology and Environment.
Step 3: Eliminate other options.
Kottayam, Kannur, and Palakkad do not host this institution. Thrissur (Peechi) is the correct location.
\[ \boxed{\text{Thrissur}} \]