This result means the Citizens lead over second-place Liverpool stands at just four points, with Jurgen Klopp's side playing their game in hand against Arsenal this midweek.
With Liverpool having cut the gap to three points with their victory over Brighton & Hove Albion on Saturday, it conjured their eighth league win on the bounce to remain hot on the tail of leaders City. Last night's game meant that the onus was on the champions to respond, and unfortunately, they failed to do so.
In his post-match press conference, Pep Guardiola was critical of City’s inability to take their chances in front of goal. "Luck doesn't exist in football," Guardiola said after the match. "We have to score goals and we didn't do it.
"We played to score goals and concede few. We struggled a little bit. The team that was there today, was there before and will be there in the next game. I am very pleased with the performance and the way we played."
Story of the match
The Premier League leaders dominated possession in the first half, not giving Palace any real chances in front of the goal.
Michael Olise did come close with a cheeky outside of the foot shot that whistled past Ederson's goal. On the other hand, Palace defended well when needed and left Pep Guardiola's side with nothing to show for it as the opening 45 minutes ended with the sides on level pegging.
Chances from Kevin De Bruyne and Riyad Mahrez before the hour mark forced saves from Vincente Guaita in the Palace goal, hitting the post shortly before the hour mark as the visitors ramped up the pressure on Palace.
City then had another glaring chance with 20 minutes to go as Jack Grealish sent the ball right across the front of the goal for a sliding Bernardo Silva, but his studs being an inch too short prevented him from opening the scoring as the ball bounced agonisingly wide.
Before the game, Crystal Palace happened to be the only side to have kept a clean sheet against the league leaders when the two met back in October which saw Palace stroll away 0-2 victors at The Etihad. The more chances that went begging for City, heads were notably dropping through the camp, and another blank scoresheet was looking more likely.
Guardiola's men threw all they could at Palace late on, but The Eagles dug in and held on as they stretched their unbeaten run to five games in all competitions to stay firmly in 11th place. It’s also probably fair to suggest that there were equally as many happy faces after the match up on the red half of Merseyside as the result keeps Liverpool well within the title race.
Patrick Vieira praised his side's defensive display and said Palace rode their luck at times. "When you play against City you have to concede chances," Palace manager Patrick Vieira said. "It's all about having your luck on the day, but also putting in a shift as a team.
"We did that today. We fought for the luck and we got a point. We're happy with the performance."
Tyrick Mitchell- Much praise has fallen at the feet of in-form Palace full-back Tyrick Mitchell in recent weeks. A continued run of form saw him as a stand out player in last night's match, keeping a nippy Riyad Mahrez in check while also offering composure moving the ball into forwarding areas.
Man City host Liverpool on April 10 in a match that could go a long way to deciding who will lift the league trophy come what May.