The 21-year-old had been linked with a move to Selhurst Park over the weekend and he now becomes Neil Warnock's second signing since his return to the club, following the loan addition of Wilfried Zaha.
Fryers came through the Manchester United academy but he made only six senior appearances and spent a spell on loan in Belgium with Standard Liege before moving to White Hart Lane in January 2013.
He played seven times in the Premier League last season and made another seven appearances in the Europa League.
"I found out over the weekend from my agent that there was interest and I knew Crystal Palace were the best club for me at this time of my career," Fryers told the Palace website.
"I am very excited to be here and it's a fresh start for me now. I can't wait to get out on the training pitch and show what I can do.
"I have met Neil Warnock this morning and we had a good chat about the game and things on and off the pitch. I am really looking forward to working with such a great manager and getting to know my new team-mates."