Patrick Vieira’s side dominated the first 15 minutes, only to go behind after Solly March latched onto a Kaoru Mitoma pass against the run of play to open the scoring.
Wilfried Zaha, Michael Olise and Odsonne Edouard were each guilty of missing clear chances in the first half as the Eagles’ extended a winless run to 12 matches.
Despite a bright start, it could have got worse for the Eagles who lost their discipline after conceding the goal.
Referee Peter Bankes should have sent Cheick Doucoure off after he brought down Moises Caicedo, who was through on goal, while already on a yellow card.
Palace lost confidence in the second half and created little against their arch-rivals. The travelling support have again witnessed a lack of cutting edge in front of goal despite the return of top scorer Zaha, who lost his individual battle to Joel Veltman.
They did, however, see Palace supporter and former ballboy Joe Whitworth drafted in for his debut at just 19 years and 15 days old.
He started with No1 Vicente Guaita sidelined through injury shortly before kick-off, no2 Sam Johnstone already out with a calf issue and Jack Butland having been loaned to Manchester United.
In difficult circumstances, Whitworth excelled, particularly in the second half making excellent saves after efforts from Danny Welbeck and World Cup-winning midfielder Alexis Mac Allister.
Even still, the league leaders Arsenal will be licking their lips at the prospect of facing a team that hasn’t won in 2023 and with such an inexperienced shot-stopper in goal.
As Roberto De Zerbi’s side propel themselves into an increasingly realistic battle to qualify for the Champions League against Tottenham, Newcastle and Liverpool, Palace must be wary of dropping into the Championship.
Vieira’s side remain 12th in the league but are trending downward as they sit just three points above the drop zone.
If they lose on Sunday, as many expect to do against Mikel Arteta's brilliant Arsenal side, they will be in the thick of a relegation dogfight. They will be down there with eight other desperate teams and have an international break to mull over their increasing peril.