The 32-year-old has made just five appearances for Palace in the Premier League this term - all as a late substitute - and will look to kick-start his career in West Yorkshire.
Terriers boss David Wagner will hope Puncheon can provide the creativity sorely lacking in a Huddersfield team that has scored only 13 goals and mustered just 10 points this season to leave them bottom and in serious danger of a return to the Championship.
Wagner told the club's official website: "I'm very happy that we are able to welcome Jason to Huddersfield Town.
"It is clear that we want to add quality and options to our midfield areas in this January transfer window and I'm sure many of our supporters know about Jason from his years playing in the Premier League.
"It is important that our additions in January have the ability to arrive and make an immediate impact in our team, which I'm sure Jason can. He has played in this division for nearly a decade now and knows what it takes to be successful.
"As well as being a very good player, he is a great character. He has been the captain of Crystal Palace and is a real leader in the dressing room, which is something we wanted to add too.
"He's now totally fit after the knee injury that he suffered last season and he's been very keen to come here and show that he is still capable of performing at the top level, which is great news for us. I'm really excited about working with him to help him understand our way of play."