Pardew, who arrives on a three-and-a-half-year contract, was in the stands on Thursday to watch Palace as they drew 0-0 with Aston Villa at Villa Park, with caretaker manager Keith Millen confirming the 53-year-old had been in the dressing room at the end of the game.
In a statement on Saturday, Palace announced the return of Pardew to Selhurst Park, 13 years after he left the club as a player.
The 53-year-old fuelled talk of a return to Selhurst Park when he failed to appear at a media conference following Newcastle's 3-2 victory over Everton on Sunday.
"I am absolutely delighted to be the new manager of Crystal Palace," said Pardew. "Everyone knows my history here, what's important now is to move the club to the next level.
"I believe with the backing of Steve and the board I can help achieve that and create some new exciting history for the club."
Palace co-chairman Steve Parish added: "We wanted a manager with a great track record and proven experience in the Barclays Premier League.
"In Alan we have both these things as well as a man who has great affection for this club and shares my determination to take us to the next level."
Newcastle then revealed on Monday that they had agreed a compensation package with Palace that enabled the struggling London club to hold talks with Pardew with a view to naming him as successor to Neil Warnock, who was sacked on Saturday.
Pardew spent four years at Palace in his playing days, scoring the winning goal in a shock 4-3 FA Cup semi-final win over Liverpool back in 1990.
The former Southampton boss had four years at the St James' Park helm and was the fourth longest-serving manager in the top four tiers of English football behind Arsenal chief Arsene Wenger, Paul Tisdale at Exeter City and MK Dons' Karl Robinson.
Pardew endured a turbulent reign at Newcastle and had to contend with protests from sections of supporters who wanted him sacked, particularly during a dismal run in the second half of last season.
He now begins the challenge of guiding Palace – who are a point adrift of safety in the league – away from trouble, but his first game will be against Dover Athletic in the FA Cup on Sunday.
