Diddy, reportedly worth £360 million, is said to be keen to invest some of his fortune in the south London club, who he likes apparently because of their flashy name.
A source close to the rapper said: "Diddy was in London meeting football fixers a couple of weeks ago. The finance is in place - he's just deciding who he thinks he'll make a bid for.
"Portsmouth were mentioned, but he thought Palace were a better idea. He could cover their debt and bankroll a return to the Premier League. He liked the name as well."