The clubs did not disclose the transfer fee for the four-year contract but British media have said it was 27 million pounds plus extras that could see the deal rise to more than 30 million.
Former Liverpool manager Brendan Rodgers signed the player from Aston Villa at the start of the 2015-16 season but the Belgian never won a regular starting place under him or his successor, German Juergen Klopp.
"I'm very happy to commit my future to Crystal Palace and I'm looking forward to meeting the manager, the players and the staff," Benteke, 25, said in a statement issued by his new club.
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Benteke scored 10 goals in 42 games for the Anfield club and according to media reports Liverpool rejected two previous bids from Palace in an attempt to recoup most of the 32.5 million pounds they spent to sign him from Villa.
He becomes Palace's fourth signing of the transfer window after Andros Townsend, James Tomkins and Steve Mandanda.
Palace will play at London rivals Tottenham Hotspur later on Saturday after losing their opening game of the season 1-0 at home to West Bromwich Albion last weekend.
(Reporting by Sudipto Ganguly in Mumbai; editing by Clare Lovell)
