In-form Kenny Miller's superb hat-trick took his tally to 12 goals in nine
games to help Wolves consolidate their position in the Nationwide Division One play-off places.
The former Rangers and Hibernian striker gave Wolves a first-half lead.
And after Dean Sturridge had doubled the advantage, he completed his treble late on as Dave Jones' men collected three points in the league at Molineux for the first time since 7 December.
Miller had the first shot of the match in the 18th minute but fired wide,
while Cameron flashed a volley over the crossbar from 25 yards.
Scot Miller eventually broke the deadlock five minutes before the break when a mistake in the Palace defence allowed Proudlock to break free and when his low cross from the right evaded everyone, Kennedy put the ball back in the danger area and Miller tapped home.
Palace rarely threatened an equaliser after the break and, as they began to throw men forward, Wolves added a second in the 77th minute when Kennedy put in a superb cross which Sturridge poked home.
Miller beat the offside trap and latched onto Cameron's superb pass to net his second six minutes later and was then fouled by Darren Powell in injury-time before completing his hat-trick from the penalty spot.
Wolverhampton: Murray, Irwin, Lescott, Butler, Naylor, Newton,
Ince, Cameron, Kennedy, Miller, Ndah. Subs: Oakes, Clyde,
Sturridge, Rae, Proudlock.
Crystal Palace: Berthelin, Symons, Powell, Popovic,
Butterfield, Mullins, Derry, Riihilahti, Gray, Johnson, Adebola.
Subs: Kolinko, Akinbiyi, Routledge, Black, Granville.
Referee: J P Robinson (E Yorkshire).