The visitors had beaten Ipswich twice last season and also won on each of their last four trips to Suffolk, but were kept at bay by an outstanding defensive display by Blues skipper Jason De Vos.
The only goal came on 72 minutes after good work by the Ipswich front pair of Alan Lee and Pablo Counago before Gary Roberts crossed to the far post for Walters to get ahead of his marker and power his header home.
Overall the match was a quiet affair, despite both sides being unbeaten and having the chance to go top.
There were a couple of moments of controversy, with home fans calling for a red card when Palace keeper Julian Speroni stopped a Lee cross with his hands outside the box, but referee Andy D'Urso's yellow card looked the right decision as it wasn't a clear goalscoring opportunity.
Palace will feel more aggrieved at the other controversial moment when Ipswich left-back Dan Harding appeared to handle a bouncing ball in his own box just after half-time.
Ipswich could have gone in front with their first meaningful chance when Walters whipped in a great cross from the right wing, but Lee misjudged the flight of the ball and headed it well off target.
The save of the half came on 34 minutes after Alex Bruce was adjudged to have fouled Carl Fletcher 25 yards out.
Stuart Green's curling free-kick was destined for the top corner only for Scotland international Neil Alexander to palm it to safety.
The game livened up as half-time approached with Owen Garvan and David Wright firing over for Town, Speroni saving a low Roberts drive, Counago flashing a low shot across goal and Green being denied by Alexander.
After the break it took a while to get going before Walters brought down a difficult ball superbly and fired a terrific cross along the six-yard line, but no-one was on hand to apply the final touch.
Speroni comfortably gathered a Lee shot on the turn and, from his clearance, the home defence misjudged the bounce and James Scowcroft lifted a volley not far over.
A Roberts cross caused confusion in the Palace box as it was missed by Lee and bounced off Counago before Palace hacked it clear, but soon after Walters pounced for what proved to be the winner.
Palace sent on another ex-Ipswich man in Shefki Kuqi and pumped plenty of dangerous balls into the home box, but the excellent De Vos - ably assisted by centre-half partner Bruce - dealt well with everything to earn Ipswich a first clean sheet of the season.