Lions boss Kenny Jackett has yet to decide whether to make Puncheon's loan deal from Southampton a permanent transfer this month, but the winger is certainly putting forward a strong case.
He stunned Palace with an early opener and then struck twice more in the second half to leave Millwall on the coat tails of the play-off pack.
The Eagles, by contrast, remain rooted in the bottom three after their winless run stretched to five matches.
Millwall got 2011 off to a perfect start with a goal after just eight minutes, Puncheon rifling the ball home from just inside the box after Palace failed to clear Josh McQuoid's header.
Palace attempted to hit back straight away and Sean Scannell fired wide before Darren Ambrose's free-kick was spilled by Millwall goalkeeper David Forde, who just managed to scoop the loose ball clear with Pablo Counago ready to pounce.
Eagles boss George Burley has been linked with a move for former Tottenham frontman Steffen Iversen and it is clear to see why the ex-Scotland chief feels he needs a physical presence in the box.
But it was the hosts who came closest to a second goal during the first half, Puncheon rifling a shot against the post and Liam Trotter seeing his follow-up cleared off the line by Adam Barrett.
The lively Trotter also forced a decent save from Julian Speroni and looped a header just over the bar on the stroke of half-time.
Palace went on the attack after the break and Scannell twice fired wide, but it was the Lions who grabbed the game's crucial second goal after 64 minutes.
Trotter played in Scott Barron, who in turn found Puncheon and the former Plymouth wideman did well to make room for himself before lashing his shot past Speroni.
And six minutes later Puncheon completed his treble in fine style. Again Trotter was the provider and Puncheon was never going to miss from 12 yards out to cap a fine afternoon's work.
Millwall could have had a fourth when Jack Smith fizzed a low ball across the penalty area but John Marquis could not find the finishing touch.
It did not matter, though, and Puncheon left to a standing ovation moments later from time having boosted Millwall's play-off challenge and added a few digits to his transfer fee in the process.
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