The Moroccan international, who spent an unsuccessful six months at West Ham last season, becomes manager Ian Holloway's seventh signing of the summer.
Chamakh failed to establish himself in the Arsenal first-team on a consistent basis since arriving from French club Bordeaux in 2010.
The 29 year old's final goals for the Gunners came last October in the remarkable 7-5 League Cup win against Reading.
Chamakh, who will wear the no.29 shirt, will face competition from Dwight Gayle, Stephen Dobbie and Kevin Phillips for a starting berth.
Palace begin their Premier League campaign on Sunday at Selhurst Park against London rivals Tottenham.
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