The 26-year-old Republic of Ireland international striker has moved to Selhurst Park for an initial £1.1 million fee and has penned a three-year deal with The Eagles.
The fee Blues receive for Morrison could rise to about £2million based on appearances and success.
Morrison joined Blues from Palace three seasons ago for £4.25 million with striker Andrew Johnson moving to Selhurst Park as part of the deal.
However, he has failed to hold down a regular starting place at St Andrew's and wanted to leave to secure regular first team football.