Knockaert cut in from the right in the 74th minute and curled an unstoppable left-foot shot from outside the area that went in off the far post.
The win in the so-called M23 derby — because of the motorway that connects Brighton to South London — puts Brighton level with Palace on 33 points but with a game in hand.
Glenn Murray had put Brighton ahead in the 19th minute against the run of play, capitalizing on a defensive mistake to run onto a long ball up the pitch before beating goalkeeper Vicente Guaita with a well-placed strike inside the far post.
Luka Milivojevic leveled from the penalty spot in the 50th after Andros Townsend was tripped inside the box.
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