The veteran boss, who parted company with Leeds United last year, spent almost three seasons at Selhurst Park between 2007 and 2010 before moving to QPR.
As reported by Goal, he shook off competition from Steve Clarke to land the position, with chairman Steve Parish having finally found a successor to Tony Pulis after the former Stoke City manager's abrupt exit.
Neil has agreed a two-year deal and will lead the team this Saturday at Newcastle United. More online shortly.— Crystal Palace FC (@CPFC) August 27, 2014
Both Steve Clarke and Warnock are believed to have been interviewed this week after ex-cardiff City boss Malky Mackay withdrew from the running.
The Scot's bid for the vacancy collapsed following allegations of inappropriate text messages between himself and Iain Moody while the pair was at the Welsh outfit - with the latter since resigning from his role as sporting director at Selhurst Park.