The Foxes came crashing back down to earth following their shock win over Manchester United with a ruthless defeat at Selhurst Park
Second-half goals from Fraizer Campbell and captain Mile Jedinak were enough for Palace to clinch all three points on Saturday, as they won at Selhurst Park for the first time this season.
The result was arguably a fair reflection of the match, with the hosts creating the better chances, while Leicester failed to reach the same level of performance that had seen them shock Manchester United 5-3 last weekend.
|VIEW FROM SELHURST PARK
|By Harry Sherlock
A Jekyll and Hyde match at Selhurst Park.
In a first half of little quality, both teams toiled and struggled to create anything clear cut, though Neil Warnock clearly got into his players at half-time. Palace came out a team possessed and blew Leicester away in the second period.
Goals from Fraizer Campbell and Mile Jedinak have given them a vital win but Nigel Pearson will be fuming. Leicester simply collapsed, with Esteban Cambiasso particularly disappointing.
The breakthrough eventually came six minutes after the restart when Campbell - who reportedly courted interest from Leicester in the close-season - made it two goals in his last two Premier League matches after he netted in the 3-2 win at Everton last Sunday.
Palace doubled their lead in the 54th minute when Jedinak headed home Puncheon's free-kick.
Warnock reverted to the XI that beat Everton after a much-changed team had been knocked out of the League Cup by Newcastle United on Wednesday, while striker Marouane Chamakh was on the bench after nearly a month out with a hamstring injury.
The visitors were, unsurprisingly, unchanged from the team that beat Manchester United.
After a cagey opening, it was Leicester who had the first opportunity in the 13th minute.
Dean Hammond's long ball into the box fell kindly for Jamie Vardy, who worked the ball onto his left foot but shot straight at Julian Speroni.
Palace gradually settled into the game and they enjoyed a spell of pressure just before the half-hour mark, the lively Yannick Bolasie digging out a cross from the left before Puncheon's nod down found James McArthur, whose shot was deflected over the crossbar.
From the resulting corner, Joe Ledley's thumping header was hacked away just in front of the goal-line by Esteban Cambiasso, before Puncheon's curling 25-yard effort drew a fine save from Schmeichel.
The hosts claimed for a penalty five minutes before the break when Bolasie appeared to be tugged to the ground by Ritchie de Laet, but referee Keith Stroud was unmoved.
Leicester started the second half well and David Nugent saw a goalbound effort deflected wide by the foot of Joel Ward.
But it was the hosts who broke the deadlock in the 51st minute.
Puncheon's corner from the right was headed back across goal by Scott Dann and Campbell got the slightest of touches in the six-yard box.
The home fans were on their feet again just three minutes later.
Puncheon was again the architect with a whipped free-kick from the left and Jedinak leapt highest to glance his header across Schmeichel and into the far corner.
From there, Warnock's men seemed content to protect their two-goal lead as Leicester were often frustrated by a stubborn Palace defence.
The visitors peppered the box in the final 15 minutes and felt they should have had a penalty when Vardy went down in the area under a challenge from Ward, but Stroud waved play on and Palace saw out victory.