Dobbie scored three goals in 15 loan appearances for Palace towards the end of last season and played a key role in their promotion to the Premier League via the Championship play-offs.
The Scotsman has experience of top-flight football in England from his time with Swansea City and he played under Palace boss Ian Holloway during a couple of loan spells with Blackpool.
Dobbie told Palace's official website: "I'm delighted. It was all agreed in principle coming on loan. Obviously I've worked with the gaffer a number of times and there was no problem with that.
"A lot of people don't see the side to the gaffer that we do - on the pitch, on the training field, on the bus and in the changing room.
"We know what he's like and we know how good he is tactically. You just have to look at the play-off semi-finals and the final, how the boys played the way he wanted and we got the right result. I'm sure he'll be buzzing and raring to go.
"I enjoyed my football last season here and I like to think I had a part in helping the team getting promoted. But it's a new season now, that's in the past. We've just got to get ready in pre-season and get ready for that first game.
"It's every player's dream, especially in the Championship - they want to be playing in the Premier League. You go away and have a nice holiday, but still in the back of your mind, you've only got four weeks off, so maybe in a week and a half, you're going to know who you're playing in that first game.
"Then you start to look through all the other fixtures. I think we've got Man United, Liverpool and Chelsea all away in our first games against them, so the second part of the season will be exciting, especially for the fans."