Neil Warnock returned to Bramall Lane in triumph as Jamie Scowcroft killed off Sheffield United and in-form Palace generally out-battled Bryan Robson's promotion favourites.
While shouts of 'Robson out' echoed around the stadium, former Blades boss Warnock was applauded off the pitch by the home fans who are fast losing patience with their new manager.
The Palace boss, who left United in May after their relegation from the Premier League, has pulled the London side from the relegation zone to within touching distance of the play-offs after an 11-match unbeaten run .
United, who are heading the other way, had carved out the first opening when full-back Phil Bardsley drilled in a long-range strike which was smothered on the line by Julian Speroni.Sean Scannell got the better of Keith Gillespie cutting inside to fire an angled drive which was blocked by Paddy Kenny and, as the ball rebounded to the midfielder, he scooped it over the target.
United almost broke the deadlock on 19 minutes when Jon Stead picked out the fit again Rob Hulse, who finished with a low right-foot strike which was blocked by Speroni, before Stead fired wide with Hulse unmarked eight yards out.
Palace swept ahead in the 38th minute when Ben Watson's free-kick was met by centre-back Mark Hudson.
He bundled the ball to Scowcroft, who looped it past Kenny from six yards.Tom Soares tried his luck from 25 yards after spotting Kenny off his line but, with the United keeper scampering back, his dipping shot looped inches over the bar.
Hulse saw his close-range shot blocked by Speroni as he guarded his post, before the Palace keeper dived bravely to snap up a Stead cross with substitute Billy Sharp waiting to pounce.
Speroni foiled Bardsley in the 68th minute as the defender's stinging free-kick from 25 yards bounced off the keeper's chest, before Hulse squandered a chance by lashing the ball into the side netting from five yards after Palace had failed to cut out Stead's low cross.
Hulse saw his overhead kick cut out by Speroni and Sharp's dipping free-kick from 30 yards almost found the target as Palace clung on at the death.