Cahill has signed a two-year deal at Selhurst Park and will earn around £75,000 a week.
He becomes Roy Hodgson’s third summer signing after Ghana striker Jordan Ayew and Stephen Henderson.
Cahill was a regular at Chelsea for seven-and-a-half seasons after joining the club from Bolton Wanderers in January 2012 but lost his place under Maurizio Sarri last term, making just two substitute appearances in the Premier League all season.
"I’m glad to be here, I think it’s a good opportunity for me to continue my career in the Premier League, and to play in a good, exciting team," Cahill said.
"There are some very exciting, talented players here. I’m looking forward to the challenge."
He added: “I’m hungry to prolong my career as long as I possibly can – I feel like I’m in great shape and whoever I play for, I’d like to think that I give it 110% and leave everything out there - so hopefully that will be good enough for the manager, my team-mates and also the fans.”
Roy Hodgson has managed Cahill before during his time as England manager, and he expressed his delight after beating the likes of Burnley and West Ham United to the 33-year-old’s signature.
“I’m delighted that Gary has joined us. He’s a fantastic footballer who brings a wealth of international and Premier League experience," Hodgson said of the centre-back.
"Having worked alongside Gary during my time as England manager, I know that he is going to be a valuable asset and I’m so happy to be working with him again.”
Crystal Palace begin their Premier League campaign with a home game against Everton on Saturday.
