A late winner from Jamie Bird condemned Palace's under-18 side to defeat in south Wales.
Michael Phillips had netted his fifth goal in three games from the penalty spot to give the Eagles the lead early in the second half, but Ken Gillard's men were pegged back by the Bluebirds and Bird's goal eight minutes from time saw a point slip from their grasp.
Palace nearly took the lead at the start of the game but a fine block on the line by Cameron Coxe prevented the deadlock from being broken, but at the other end Jake Watkins beat two men however shot straight at Oliver Pain.
There was controversy midway through the half when Corie Andrews burst through on goal and was clattered into by City goalkeeper Luke Wakeman, but despite the striker being knocked to the floor the foul was given against the Palace man.
Cardiff ended the half strongly and hit the bar through Jamie Veale before Tom Pearson headed a golden chance wide of the mark, but two minutes after the restart the visitors took the lead.
A quickly-taken free-kick saw Watkins trip a Palace attacker in the box and Phillips stepped up to convert from 12 yards and find the net for the third successive game.
But just five minutes later the hosts were level when Eli Phipps got on the end of Veale's cross to smash the ball home, and then Andrews was left frustrated again when he had a goal ruled out for offside.
And as the game entered the dying stages Bird volleyed home a Rhys Abbruzzese cross to complete the comeback, but Wakeman was forced to save superbly from Andrews late on to prevent the Eagles youngsters from returning home with a deserved point.