The London club has been without a manager since Dougie Freedman left to take over at Bolton but hopes to convince the Blackpool boss to move to Selhurst Park.
The 49-year-old guided the Tangerines to the Premier League in 2010, and, despite relegation that season, the club almost bounced immediately back before being defeated in last season's playoff final by West Ham.
Palace is currently without a manager after Dougie Freedman left to take over at Bolton, but chairman Steve Parish has revealed that a deal for Holloway, while a possibility, is still a long way off.
"An approach has been made, but it's far from done," Parish told the BBC.
Palace currently sits fourth in the League Championship, while Holloway's Blackpool is in 12th place.