Liverpool's loss to Chelsea earlier on Sunday left City knowing they could become champions by winning their four remaining games, and goals from Edin Dzeko and Yaya Toure sealed success at Selhurst Park.
Palace had been looking to claim another big scalp after climbing into the top half on the back of five straight wins, but Dzeko opened the scoring after just four minutes when he headed home from Toure's cross.
Toure added a second with an excellent finish into the top corner two minutes before half-time after a strong run from midfield, and City held firm after the interval to close to within three points of leaders Liverpool with a game still in hand and a superior goal difference.
Toure needed just four minutes to wrestle control, returning after missing two matches with thigh trouble.
The 30-year-old chipped an inch-perfect cross into the Palace box, allowing Dzeko to ghost in and nod the visitors into the lead.
City's early goal quelled any nerves, evident when Sergio Aguero's ambitious overhead kick zipped just over Julian Speroni's crossbar.
Tony Pulis has whipped Palace into far sterner shape than to fold however, and the hosts threatened when Yannick Bolasie's cross almost reached Cameron Jerome.
Palace's first-half forays remained scant however, with Damien Delaney forced to intervene as Aguero raced towards Samir Nasri's smart return ball in the home area.
Jason Puncheon might boast four goals in April, but Palace's form midfielder could find no power with a 20-yard shot.
Dzeko failed to connect with a far-post cross, Scott Dann had to cut out Pablo Zabaleta's knock-down destined for Aguero, and Vincent Kompany headed wide from the corner.
So often City's central force, Toure then sealed his side's dominance with a goal of effortless class, but brutal build-up.
The Ivory Coast star played a simple one-two with Dzeko, then saw no reason not to repeat the feat with Nasri.
Rumbling into the Palace box, with defender Delaney stumbling in desperation, Toure set himself, and dinked the ball past bystander Speroni.
Palace grafted for the half's last word, but Jerome could not reach Puncheon's teasing cross.
Marouane Chamakh wasted a chance to test the shaky Martin Demichelis after the break, firing a loose pass past Bolasie when he could have scythed on undeterred.
Another sumptuous Toure chip nearly set James Milner free, before the former Barcelona fulcrum scuffed a cut-back cross after outstripping Joel Ward.
One more long-range curling effort that sailed over the bar proved Toure's final offering, the rangy midfielder withdrawn just past the hour in a clear protective measure from Pellegrini.
Palace may have been subdued on the field, but the home support was determined to toast Premier League safety, and manager Pulis' sterling turnaround job.
Aguero had a gilt-edged opportunity to extend City's lead, only to lead with the outside of his right boot and clip the ball straight at Speroni.
Palace's highly-rated keeper then kept out Dzeko's shot despite a wicked deflection off Dann.
Tom Ince had a half-hearted penalty claim rebuffed by referee Howard Webb as Palace fought to capitalise on Toure's early departure.
City were not to be denied though, leaving London with a credible title chase tucked into the bag.
City have a trip to Everton and home clashes with Aston Villa and West Ham still to come while Liverpool travel to Palace next, before hosting Newcastle at Anfield on Sunday May 11, the final day of the season.