It was real smash-and-grab stuff by the Londonders who played second fiddle for an hour.
But Scunthorpe, who finished the match with ten men, were left to rue a series of early missed chances on.
They dominated the first half, but could not find their finishing touch, squandering a succession of good chances.
First, new signing Donal McDermott, on loan from Manchester City, fluffed his lines when he sliced his shot wide at the far post.
Then midfield man Grant McCann spooned a close-range effort over the bar and finally skipper Cliff Byrne stabbed a close-range shot wide of the far post with the goal at his mercy.
Little was seen of Palace as an attacking force, as they looked a shadow of the side that knocked Wolves out of the FA Cup in midweek.
A tame effort from striker Alan Lee was the best they had to show for their efforts in the opening 45 minutes.
Scunthorpe continued to press in the second half, but it was Darren Ambrose who rifled Palace ahead with an angled shot into the far corner following their first corner of the game.
Nine minutes later Scunthorpe were reduced to ten men when full-back Marcus Williams was red carded for his challenge on substitute Kieran Djilali.
Centre-back David Mirfin thought he had rescued a point for Scunthorpe in the 84th minute with a thumping near-post header from a corner.
But Danns popped up deep into stoppage time to fire a low shot into the bottom far corner of the net to seal another victory for in-form Palace.