England international Defoe, who will leave next month to join Major League Soccer team Toronto FC, came on with the game finely poised at 1-0 following Christian Eriksen's opener, and sewed up the three points for Sherwood's side with a measured finish.
Palace had dominated the first half and should have been in front after they were awarded an early penalty, which was hammered high and wide by Jason Puncheon.
Eriksen opened the scoring five minutes after the break before Defoe grabbed his first Barclays Premier League goal since April to take Spurs fifth in the table and leave his manager delighted.
"Jermain will score wherever he plays, in any league in the world," Sherwood said.
"He is a goalscorer, he loves scoring goals and if he doesn't score he gets the hump. He will go home happy tonight.
"He warmed up like an Olympic athlete. I saw the appetite he was showing to come on and when he came on he showed his worth."
Palace, who slipped to the bottom of the table following the defeat, not only spurned a penalty chance but also created the best of the opportunities before the break, with Sherwood admitting the Eagles were much more attacking than he had anticipated.
"I think we were taken a bit by surprise by Palace," he said.
"The amount of attacking options they had, they were very powerful in the wide areas and deliver a lot of balls into our box and we had to stand up to it.
"The only positive for me in the first half is that we got in at 0-0 but in the second half I thought we matched them for desire and effort and then our quality shone through.
"We could have scored a few more and then Jermain comes on and gives us a bit of breathing space."
Despite falling to the foot of the table, Palace boss Tony Pulis said he would have taken such a position at this stage of the season, with just six points separating the bottom half of the Premier League.
"We've gone bottom because Sunderland and West Ham have won," he said.
"But it has actually had a concertina effect, moving everyone closer when you look at it now.
"When I came to the football club if you said this would be the situation with 17 games to go I would have taken it. It gives us a great chance and a great opportunity, it gives us as good a chance as everyone else.
"I thought we played really well in the first half and I was disappointed not to come in with a lead. The size of the lead would be debatable but I don't think anyone could question we deserved to be winning at half-time."
Pulis also highlighted the need to add more players to his squad during the transfer window, with those boasting previous Premier League experience preferable to the former Stoke manager.
"When we come under pressure we need to have more strength about us," he said.
"We have players who are exciting players and can do things. We have got a budget we have got to keep to.
"It is just trying to get players who have got something to prove, people who have got a little experience in the Premier League who have faded away and want to come to us and have another crack at it."
- Sports & Recreation
- Major League Soccer
- Christian Eriksen
- Barclays Premier League