The Saints came out on top after a spectacular individual performance from Sadio Mané helped them pick up all three points at Selhurst Park, helping them climb into the top 4.
Sadio Mane marked his return to the Southampton starting XI with a superb performance at Selhurst Park on Boxing Day, as he opened the scoring with an excellent early goal before turning provider for Ryan Bertrand to double the visitor's lead early in the second half.
Defender Toby Alderweireld, on loan from Atletico Madrid, then opened his Premier League account with a towering header shortly after to seal all three points for Ronald Koeman's men, despite a late Scott Dann consolation for the hosts.
Southampton showed some of the swagger and quality that it produced early in the season, which saw it rise as high as second in the table before a slump of a draw and four losses from five games.
However, it got back on track with a 3-0 win against Everton in its previous match and can now look forward to Sunday's visit of table-topping Chelsea with a degree of confidence.
Meanwhile, Palace has won just one of its last 12 Premier League fixtures and has fallen into the relegation zone courtesy of Hull City's win at Sunderland.
Out-of-form Palace looked set for another difficult afternoon right from the off as Koeman's team began on the front foot.
A poorly cleared corner allowed Alderweireld to test Palace keeper Julian Speroni with a dipping 35-yard effort after just three minutes.
The Eagles responded quickly as Jason Puncheon forced a smart save from Fraser Forster with a low drive from the edge of the box.
But Southampton remained the better side, and it took a deserved lead after 17 minutes.
Mane latched on to James Ward-Prowse's first-time pass to get in behind the home defense before getting around Speroni and applying a neat finish.
Forster then made a comfortable save from Palace skipper Mile Jedinak's free kick before Frazier Campbell rattled the bar having contentiously been given offside.
Ward-Prowse nearly added a second for the visitor three minutes before the break, but his header looped just over.
The Saints had to wait just two minutes into the second half to double their advantage through a superb Bertrand strike.
After some good work down the right by Mane, he produced a low, driven cross that eventually found the Bertrand on the edge of the box, and the fullback confidently lashed home.
The lead was extended further just six minutes later, when a simple clipped corner was met by Alderweireld, who rose highest to power home a header.
Star man Mane came close to notching his second of the game shortly after, curling a long range effort narrowly wide.
To its credit, Palace kept fighting and got a goal back through Dann in the 86th minute, as the defender nodded in Jedinak's corner.
But it was too little, too late for Neil Warnock's men, who look set to be involved in a relegation dog fight.