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The former Fulham midfielder penned the contract in the first week of July and has expressed his delight with the move, which included a fee of £600 000.
The transfer is a step down for the South Africa international as he will be playing his football in the Championship instead of England's top flight, but he is determined to return as soon as possible.
Dikgacoi, who spent the last six months on loan at Selhurst Park, wrote on his website: "It is good to be back at Palace. I know for a fact that they are aiming at going back to the Premier League and I hope I add value in making sure that they achieve their objective.
"I would still love to play in the Premier League and if it's not with Palace I hope to have a good season and catch the eyes of the other teams."
Meanwhile, Eagles manager Dougie Freedman is also keen on evaluating SuperSport united defender Morgan Gould, who may join the club for a trial this month.
Freedman told Times Live: "I saw quite a bit of him when I was weighing up the move for Kagisho Dikgacoi and he looks as though he could be what we are looking for.
"He's an experienced international centre-half and he could be the answer. But we would have to take him on trial before we're committed to anything and, as I say, it hasn't been 100percent confirmed that he's coming yet."
