The 21-year-old, who has excelled as both a full-back and winger throughout his career, has signed a deal with the club until 2031, subject to international clearance.
Born in the Israeli city of Haifa, Khalaili rose to prominence with nearby Maccabi, representing them 52 times and scoring 15 goals, including a crucial effort in their 2023 Israel Super Cup success.
Khalaili subsequently moved to Belgian Pro League side Union SG in the summer of 2024 and soon set about claiming more silverware.
He played a key role in securing their first top-flight title in 90 years the following year, earning Les Unionistes UEFA Champions League football – scoring three times in that competition – before adding a Belgian Cup to his trophy haul last season.
Despite his young age, Khalaili has also won 16 senior caps for Israel. He becomes the fifth summer signing for Palace this season following the arrivals of Óscar Mingueza, Takehiro Tomiyasu, Dwight McNeil and Evann Guessand.
Chairman Steve Parish said: “We are very excited to have completed this signing and we are delighted that Anan has chosen to continue his journey with Crystal Palace.
“We look forward to welcoming him to Selhurst Park.”
Khalaili said: "I'm happy to be here, I'm excited, and I can't wait to start.
“I’ve followed the Premier League – it's a new challenge for me – and I've followed Crystal Palace for a long time. I'm happy to be here."
Everyone at Palace would like to welcome Anan to South London and wish him the very best for his career in red and blue.