Jim Brennan's corner was swung in at pace, and Michael Dawson hooked the ball in from eight yards out.
With 15 minutes gone Palace should have drawn level but ex-Forest striker Dougie Freedman failed to make contact with the ball when five yards out unmarked, much to the delight of the Forest faithful.
Palace picked up their game as Forest sat back on their 1-0 lead and on the half-hour mark Shaun Derry came close as he forced an outstretched Darren Ward to tip onto the woodwork.
Palace made their game plan clear from the start of the second half and in the opening minutes Palace captain Hayden Mullins headed the ball to Dele Adebola who took the ball two yards inside his own half and fired his shot inches wide from ten yards out.
Against the run of play Forest doubled their lead 14 minutes after the break when Marlon Harewood turned Tony Popovic 30 yards out deep on the right, took the ball all the way and beat Cedric Berthelin from an acute angle. The French keeper will have been disappointed with his attempt at a save.
With 15 minutes left the visitors finally gained some reward for their attacking endeavour when they were awarded a penalty after Dawson brought down Andrew Johnson.
The striker got up to convert the penalty but the Eagles were unable to prevent Forest taking all three points.