Palace central defenders Damien Delaney and Peter Ramage took advantage of sloppy keeping by Kasper Schmeichel in the space of five first-half minutes to set up their 2-1 victory.
"We were a little off our game. Palace deserved to win and congratulations to them for the way they played," Pearson said.
"Too many of our lads failed to find the form they have shown so far, but what
we never did was to down tools. They're an honest bunch and they kept going.
"When you concede two goals in five or six minutes it makes a big contribution
to any match. Today we didn't quite have the quality we needed to get back. We huffed and puffed without quite finding our feet.
"I've no complaints about the referee for Palace's first goal but there could have been three penalties - two to us, maybe one to Palace.
"We have done exceptionally well so far this season but were beaten by a good
"We will now pick ourselves up for two tough away games at Watford and Bolton. I'm disappointed we've lost top spot, but I won't be dwelling on it for too long."