The 18-year-old will join the club on July 1 after agreeing a five-year deal when his contract with Derby County comes to an end.
Prior to joining Derby – who went into administration at the start of last season and ended it relegated – in 2021, Ebiowei had youth spells with Arsenal and Rangers.
He told Palace’s official website: “I’d like to thank everyone at Derby County for their incredible support over the last year or so, and for giving me the opportunity to show what I can do on the field, and I’d also like to thank the fans for their encouragement especially given the circumstances of last season.
“As everyone is aware the situation is very uncertain at Derby, so it was important for me to secure my long-term future.
“I’m incredibly excited about the prospect of joining Palace, as they have an incredible squad and huge potential. I very much hope to contribute positively to the team this season.”
Palace chairman Steve Parish said of Ebiowei, who has represented England and the Netherlands at youth level: “I’m delighted that Malcolm has chosen Crystal Palace as the best place to continue his development, following his impressive breakthrough into senior football in recent months.
“He is a highly coveted young player, and we very much expect to provide a platform for him to flourish at the highest level.”
Additional reporting from PA