Dennis Bergkamp made the breakthrough after 32 minutes before Jose Antonio Reyes and Thierry Henry added quick-fire goals to demoralise relegation battlers Palace.
Arsenal's win leaves them 11 points behind Chelsea with 11 games to play. More realistically, the Gunners remain two points behind Manchester United in the race for England's second automatic Champions League spot.
Defeat leaves Palace one place and two points above the relegation zone.
This was a clash of two of the Premiership's leading strikers. Arsenal's Henry had scored 17 goals this season, while Andy Johnson had netted 15 for Palace.
However, this was Henry's game. He scored twice and was denied a hat-trick only by an over-eager linesman's flag.
Johnson's goals have given Palace hope of avoiding relegation, but tonight he was often an isolated figure, despite grabbing a consolation from the spot.
Palace manager Iain Dowie targeted the centre of the Gunners defence - minus injured Sol Campbell - as a vulnerable area. He identified the opportunity all right, but his side could not take advantage.
Wayne Routledge and Dougie Freedman played wide with Johnson a lone striker. And they almost scored within a minute. Pascal Cygan gave the ball away, but Jens Lehmann beat out Freedman's shot then saved Johnson's follow-up.
Lehmann then had to rush back to stop the ball before the line after mis-kicking Gael Clichy's back pass.
Palace keeper Gabor Kiraly saved twice from Henry and Arsenal's anxiety began to grow. Then Palace midfield anchor Aki Riihilahti had to go off with a calf injury and Arsenal broke the deadlock.
Edu found Reyes, who crossed low to the near post. Bergkamp drifted off substitute Mikele Leigertwood and drove the ball past Kiraly.
Freedman missed a fine chance for Palace, mis-hitting his shot when unmarked at the far post. It proved a costly error as moments later Reyes collected a weak clearance and smashed a 25-yard swerver past Kiraly for the home side's second.
Kiraly made a flying save to keep out Gonzalo Sorondo's back header and Henry had another shot blocked. But Palace had no answer when Henry took a pass from a corner, cut inside and unleashed a rocket that smashed into the back of the net.
Kiraly then saved again from Reyes as Arsenal, quiet for half an hour, finished the half rampant.
Freedman fired a 48th-minute chance wide after ghosting in behind the Gunners defence.
Then Arsenal returned to the charge. Six minutes later, Henry split the Palace defence and Patrick Vieira waltzed round Kiraly to tap in a simple goal.
Bergkamp flashed a shot wide after another Henry incision and Robert Pires fired against an upright from Reyes' pass.
In between, Johnson supplied Palace's best moment when he blasted home a 62nd-minute penalty after Vieira brought him down.
Henry hit the fifth from Bergkamp's pass 13 minutes from time, after Reyes' sweeping pass turned the Palace defence.
Substitute Cesc Fabregas could have made it six from Robin van Persie's corner but he scuffed his shot when unmarked.
Arsenal's confidence is high again, but Palace's morale took a battering.