Second half goals from Ilkay Gundogan and Raheem Sterling wrapped up an impressive victory for Pep Guardiola's men, who have the opportunity to go top when they host Aston Villa on Wednesday night.
Story of the Match
The big news pre-match was that Crystal Palace would be without talismanic forward Wilfried Zaha, the Ivory Coast international ruled out due to a knock he picked up during Palace's goalless draw with Arsenal last time out.
Zaha was one of three changes for Roy Hodgson's men, with Cheikhou Kouyate and Cristian Benteke also missing out, though there was room on the bench for the latter.
Whilst Manchester City were the overwhelming favourites with the bookmakers heading into the game, Palace knew that they were capable of an upset in East Manchester, having picked up four points from their last two visits to the Etihad.
The game started as many had expected, with Manchester City dominating the ball, but despite enjoying over 80% of the possession through the opening 20 minutes, there was little in the way of chances for Guardiola's side.
But as has been the case throughout his Manchester City career, when in need, Kevin De Bruyne stepped forward.
The Belgians right-sided corner was only half dealt with, and when the ball fell back to his feet, he turned on the style.
A world class outside of the foot cross was met by a leaping Stones, who powered his header past Vicente Guaita to score his first Premier League goal for Manchester City and in turn, hand De Bruyne his 100th Manchester City assist.
The hosts continued to dominate the game, setting up camp in the Palace half for the majority of the first half, but a tame Gabriel Jesus header was as close as the Citizens came to doubling their lead, as they entered the break just the one goal to the good.
The second half began as the first had finished, with Manchester City camped inside the Palace half, and they soon made their territorial advantage count as Gundogan doubled the hosts lead in style.
It again came from a corner, with the ball only half cleared towards Gundogan, but even when the German collected the ball on the edge of the box, there was still so much left to do.
And he did that expertly, taking a touch and opening his body before curling an inch perfect effort into the top right corner, leaving Guaita helpless.
Hodgson's men would've targeted set pieces as a route towards goal ahead of the game, but it was corners that proved fruitful for the hosts on the night, as City grabbed a third goal from the corner spot.
Again it was John Stones the man on the scoresheet as the Englishman swept the ball home after Guaita had done tremendously well to keep out the initial header by Ruben Dias.
Four became five on the stroke of the 90 minute mark, with Sterling grabbing a much needed goal as he powered a free kick from the edge of the box into the top right corner, adding to the plethora of top quality goals scored on the night.
It was a routine night for the hosts, who climb to second in the table, just two points adrift of local rivals Manchester United but with a game in hand.
Both sides will be in action in midweek, Palace host West Ham on Tuesday night, with City back in action at the Etihad when they host Aston Villa on Wednesday evening.
Ilkay continues to shine
In a team littered with stars, Ilkay Gundogan often goes under the radar, but he once again showed why he is such an integral part of this Manchester City side.
His second half goal, his third in his last four Etihad appearances, gave City that two goal cushion that has alluded them on a number of occasions this season, as Pep's double pivot continues to paid dividends.
Set Piece Kings
Manchester City fans have often sung about their sides inability to score from a corner, but they did that not once, not twice, but three times this evening.
There's no questioning Manchester City's ability from open play, but now that they've added set pieces to their repertoire, they'll take some stopping!