The Eagles have agreed a deal with Southampton that will see the winger spend the season in south London as Palace look to strengthen their squad before the transfer window closes
The veteran had seen himself left out of Saints boss Mauricio Pochettino's 18-man squad for Saturday's tussle with West Brom amidst fierce competition for a place in the side.
In turn the 27-year-old has joined the newly-promoted Eagles, looking to add depth before the transfer window comes to a close in 10 days, in a season-long loan deal in order to secure first-team football.
Puncheon will not be permitted to take part when Palace face his parent side in September at St Mary's, whilst he will also be excluded when the competitors meet once againt at Selhurst Park in March.
The move sees him link up with manager Ian Holloway once again, having played for the Englishman previously during a temporary stint with Blackpool in the 2011-12 campaign.
Puncheon tallied six goals in 32 Premier League appearances last season for Southampton as they successfully beat the drop.