Butland, 27, has won nine caps since 2012 and featured in the Three Lions' 2018 World Cup squad.
"I'm very happy that the club has managed to acquire the signature of Jack to join us and compete for a place amongst our goalkeepers at the club. Jack is a player that I worked with for four years at England," manager Roy Hodgson said in a statement.
"His last game for me as England manager was a very unfortunate one where he broke his ankle and that cost him his place in the 2016 Euros. But I've always believed in Jack's potential."
Crystal Palace are 12th in the Premier League standings and host Brighton & Hove Albion on Sunday.