Goals from Owen Garvan and David Norris gave the Tractor Boys a two-goal lead before the half-hour mark, but Alan Lee scored against the club he left in the summer to pull one back.
But Kevin Lisbie and Clint Hill's own goal rounded off a productive day for the East Anglian side, while serious question marks have been left over Palace's promotion hopes after a dismal display.
After an uneventful start, Ipswich took the lead in the 19th minute when Garvan's left-footed in-swinging free-kick eluding everyone in a congested box before creeping past Julian Speroni at the back post.
Sean Scannell twice went close to levelling for the home side but it was Ipswich who extended their lead in the 28th minute.
Pablo Counago managed to get in behind Palace's back line before squaring to Norris, who thumped past Speroni to double Jim Magilton side's lead.
Palace were desperate for a quick response and got it two minutes later after Lee nodded home Speroni's hopeful punt past Richard Wright to halve the deficit against his former employers.
The home side were denied what looked a clear penalty seven minutes after the restart after Nick Carle fell under the challenge of Tommy Miller, but the referee kept is arms firmly by his side.
And Ipswich capitalised on their good fortune in the 69th minute when substitute Lisbie stroked past Speroni from close range after Jon Walters' low cross.
Paul Ifill twice went close to giving Palace a glimmer of hope, while substitute Shefki Kuqi saw his header cleared off the line before Hill nodded past his own keeper to round off a miserable day for Palace.