Palace's under 18 side saw their Youth Cup dreams end for another season when they went down 2-0 to a well organised Port Vale side.
Even with Development regulars Reise Allassani and Hiram Boateng in the side, the Eagles couldn't break down a tight back four despite enjoying much of the possession throughout the 90 minutes.
A quiet opening saw the first chance fall to set-piece dangerman Sullay Kaikai on five minutes, but his curling free-kick was easily caught by Ryan Boot.
Despite Palace bossing the opening quarter of an hour, Vale snatched the lead with their first shot of the game when Will Whieldon let fly from 25 yards and found the top corner of David Gregory's goal.
Following the setback the home side began to create much more in the final third with trialist Derek Tieku looking liveliest. He went close to grabbing an equaliser when he was found in the box by Jake Gray, and cleverly chipped the ball up on the turn before volleying at goal but it was well held by Boot.
A rare foray forward for the Valiants saw Whieldon try his luck once again from long range effort but his shot deflected inches wide of the goal after 37 minutes.
Tieku's pace was continuing to cause the Staffordshire side problems and just before half-time he found himself through on goal after a clearance from Gregory but dragged his shot wide of the far post as Gary Issott's side went into the interval trailing.
The young Eagles continued to enjoy the majority of the play in the second half but continued to find the Vale defence difficult to break through. Long shots from Tieku and Ryan Inniss failed to trouble Boot but the keeper did have to be alert to save from Inniss when he connected with a Kaikai corner on 73 minutes.
They came even closer two minutes later when a Kaikai free-kick wasn't cleared convincingly and Tieku saw his shot blocked on the line by a Vale defender, and Wieldon forced Gregory into a diving save with eight minutes left to play.
However the visitors sealed a home tie with Everton in the fourth round when Macauley Davies picked up the ball just outside the Palace box and fired a low shot past Gregory, which sparked wild celebrations from the whole of the Vale side and their dedicated group of supporters who would make the long journey back to the Midlands delighted by the performance of their young side.
Palace: Gregory, Egbo, Williams, Sow (Gabsi 59), Inniss, Khinda-John, Gray, Boateng, Tieku, Allassani, Kaikai (Palmer 74). Subs: Howlett-Mundle, King, Berkley-Agyepong.
Port Vale: Boot, Smith, Wagner, Whieldon, Price, Morris, Croft (Lander 38), Pryor, Davies, Beesley, Swaby (Osbourne 74). Subs: Hemmings, Marland, Wright.