The 18-year-old striker has impressed for Gary Issott's under-21 side this season, scoring six goals in 10 appearances while also catching the eye in several friendlies.
Kaikai has yet to feature for the first team despite being named in a number of match-day squads, but he is determined to make his mark over the second half of the season.
He told the Palace website: "I feel like it's a great achievement and that all my hard work has paid off, so I'd like to thank the club for awarding me the contract.
"I feel like I've adapted quite well this season in the development league. Last season I played a few games at that level and that helped me find my feet and it's been a good step for me to be playing regularly for them, so now the aim is to push on into the first team.
"When you play with players in the younger age groups and you see them progress it gives you the mindset that you can progress as well."
Kaikai is hoping to follow the lead of U21s team-mate Hiram Boateng, who was handed his senior debut by Tony Pulis in the FA Cup win at West Brom on Saturday.
"Hiram Boateng started on the weekend so it gives me hope that I can do the same thing," Kaikai added.
"I just hope to train with the first team more often from now on and if I get given the chance I'll hopefully take it."