Wilfried Zaha had given the Eagles the lead with a close-range volley past Kasper Schmeichel shortly before the hour mark but Roy Hodgson's side failed to hold on for a first win in five after Leicester responded.
The result means the Foxes missed the chance to close to within a point of Premier League leaders Liverpool, meaning they could drop out of the top four should other results go against their way this week.
Brilliant Barnes is now an accomplished finisher
There is no doubt that the Foxes' 23-year-old is one of the club's brightest talents but one grey area in his play has always been his finishing, however today proved otherwise.
Coming into the game, Barnes had already equaled his tally for last season with seven goals and just like he did against Manchester United on Boxing Day, the winger was the man to find the equaliser for his side.
On the edge of the Palace penalty area, the England International jinked his way past the opposition defence before a low-driven strike with his left foot found the bottom corner to respond in a man-of-the-match display.
It's clear to see Barnes has been working on his finishing and now looks like a man who is more likely to score than miss these days, with the academy graduate rapidly turning into one of the club's most important players.
Iheanacho fails to take opportunity
Making just his second league start since October, Kelechi Iheanacho was gifted a real opportunity to stake a claim for a more regular starting spot in Brendan Rodgers' side however the Nigerian couldn't make the most of his chance.
At the start of the game, Iheanacho looked promising with the 24-year-old looking to get in-between the lines of the Eagles' defence as well as hold up the play but after Luke Thomas won a penalty for the Foxes, Iheanacho couldn't take advantage.
His stuttered run-up didn't fool Vicente Guaita who promptly bided his time before diving the right way to save from the spot. Iheanacho's confidence seemed to drain as the game went on, squandering a header which would have also put Leicester in front.
Failing to conjure up anything in the second half, Rodgers replaced him with forgotten man Demarai Gray and with many believing that Leicester need another goal-scorer to take the burden off Jamie Vardy, Iheanacho's performance suggests that the Northern Irishman may have to delve into the transfer market to find his answer.
Consistency an issue for Leicester
Too many times this season Leicester have failed to take advantage of other results going in their favour and Monday afternoon at Selhurst Park was another tale in the story.
The opening 45 saw the Foxes well in control, restricting the hosts to creating very little however they couldn't punished the South Londoners and were instead made to pay for wasted chances.
Poor defending allowed Palace talisman Zaha to put Palace in front and by doing so, sit back and hold onto a lead. Unlike the first half, Leicester lacked that urgency required and struggled to break Hodgson's side down.
In the end the East Midlanders did find an equaliser but they will look back at this as two points dropped. With other sides in action over the course of the next two days, as well as games in hand from previous game-weeks, the Foxes could face surrendering their place in the top four.