Tom Soares and Clinton Morrison goals condemned Scunthorpe to an immediate return to League One and boosted Crystal Palace's play-off hopes.
Palace teenager Victor Moses shook off an injury to play a major part, crossing from the left for Soares to finish into the corner from six yards.
But the visitors enjoyed an equal share of possession but Moses again delivered for Morrison to head high into the net.
The Iron battled gamely to the end but could not stave off relegation.
Crystal Palace manager Neil Warnock:
"We all know it's going to go right down to the wire. We badly needed the three points and I would have settled for winning 1-0 and playing poorly.
"As it turned out, we played very well and could have scored more goals. But we never make it easy for ourselves.
"The play-offs are still wide open, but it was great to get the three points in the bag because we are going to the underdogs in our next two matches at Watford and Hull.
"They are going to be tough matches, but it's great for our young lads because they are playing without fear."
Scunthorpe boss Nigel Adkins:
"We have to keep going. We've three games left and I want to win all of them. I don't want to finish bottom of the table.
"We still have a game plan in place and that involves us trying to win as many games as possible.
"I'm very proud of the way my players have competed in the Championship this season. I think there have only been two games when we didn't compete.
"Maybe as individuals some of my players are not good enough to play in the Championship. But nearly all of them are under contract and we'll look to improve."
Crystal Palace: Speroni, Butterfield, Hudson, Fonte, Hill, Soares, Derry (Fletcher 74), Watson, Sinclair, Moses (Scannell 66), Morrison (Robinson 83).
Subs Not Used: Reid, Hills.
Booked: Morrison.
Goals: Soares 21, Morrison 39.
Scunthorpe: Murphy, Byrne, Iriekpen, Butler, Williams, Forte, McCann (Hayes 62), Goodwin, Morris, Paterson, Horsfield (Weston 71).
Subs Not Used: Lillis, Hobbs, May.
Att: 15,975
Ref: Keith Hill (Hertfordshire).
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