Under-pressure boss Peter Taylor shuffled his pack for the London derby in a desperate bid to turn around the dismal run - but it was to no avail despite the Eagles making a bright start.
Jamaican winger Jobi McAnuff was making his first start in five games in an unfamiliar left midfield role, but his early running led to the opener.
Danny Granville's ball released him down the left on 30 minutes and he was able to get in behind inexperienced full-back Michael Mancienne before picking out Tom Soares for a tap-in.
But the home side always looked threatening on the attack, with Lee Cook and Dexter Blackstock the danger-men.
John Gregory's men did not become deflated once Palace took the lead, and it took them just four minutes to find an equaliser.
Midfielder Jimmy Smith last week extended his loan deal from Chelsea by an extra two months having already scored twice in five starts. He added to his tally in spectacular fashion with a fantastic volley from the edge of the box which gave Scott Flinders no chance.
But Palace were determined not to let a solid first-half performance go to waste and were back in front two minutes before the break.
Leon Cort powerfully headed down a Mark Kennedy corner from the left and Clinton Morrison was on-hand to bundle home.
Palace should have extended their lead early in the second half when Morrison picked out strike-partner Shefki Kuqi with a lovely diagonal ball, but the big Finn's weak finish went straight into the hands of Simon Royce.
The former Blackburn man was left to rue that miss as it proved to be the cue for a drastic Eagles collapse.
On 59 minutes Steve Lomas scored his first Rangers goal, slamming home when the Palace defence failed to clear Cook's left-wing cross.
And Cook provided the magic to help put his side in front for the first time in the game on 66 minutes. He turned Danny Butterfield inside out, forcing the right back to bring him down inside the area for a penalty. Kevin Gallen duly stepped up to make it 3-2.
Taylor's men were in disarray, and it was only a matter of time before they conceded again.
The defence made a complete hash of dealing with a Cook cross, allowing Smith to bundle in his second of the match on 69 minutes.
Morrison and substitute Dougie Freedman threatened before the end, but it will be a tough job for Taylor to pick his side back up after this defeat as the visiting fans booed their team off the field.