The former Birmingham City defender leaves Blackburn to become Tony Pulis's third signing of deadline day, following in the footsteps of Jason Puncheon and Wayne Hennessey
Dann, a former England Under-21 international, has penned a three-and-a-half-year deal at Selhurst Park.
He becomes Palace's third signing on transfer deadline day, in a busy night for the Premier League side.
Goalkeeper Wayne Hennessey had already arrived from Wolves, with Jason Puncheon joining the club on a permanent basis after a spell on loan from Southampton.
Dann has previously played in the Premier League with Birmingham City, as well as Rovers, but suffered relegation with both of those clubs.
He made more than 100 appearances for Gary Bowyer's side but now links up with Tony Pulis, arriving with the Eagles four points above the relegation places.
The Eagles will need to recover from their busy transfer period quickly with a tough task away to Arsenal on Sunday.