According to a tweet on the club's official Twitter handle, the 33-year-old former England defender signed a two-year deal, which will keep him at Selhurst Park until 2021.
Cahill had been a regular in the Chelsea back line since 2012/13 season but played only two league matches last season.
During his Stamford Bridge spell Cahill won the Premier League twice, lifted the Champions League trophy and also won the FA Cup and the Europa League. There are some very exciting, talented players here.
"I'm hungry to prolong my career as long as I possibly can".
The south London club have been linked with moves for Real Betis midfielder Victor Camarasa and CSKA Moscow striker Fedor Chalov, but as things stand Cahill could represent their most notable acquisition of the transfer window.
He'll join a Palace team that finished 12th in the Premier League last season, becoming the club's third signing of the summer after Jordan Ayew and Stephen Henderson.
Eagles manager Roy Hodgson stressed: "I'm delighted that Gary has joined us. He's a fantastic footballer who brings a wealth of global and Premier League experience", said Hodgson.
Palace open their Premier League campaign at home to reported Zaha suitors Everton.