Hugo Ekitike marked his Liverpool debut with an early goal in the fourth minute, but Jean-Philippe Mateta levelled from the penalty spot in the 17th minute. Jeremie Frimpong, also making his Reds debut, restored Liverpool's lead on 21 minutes, only for Ismaila Sarr to equalise again in the 77th minute to send the game to a shootout.
In the ensuing spot kicks, Mohamed Salah, Alexis Mac Allister and Harvey Elliott all missed for Liverpool, allowing Palace to clinch their first-ever Community Shield — adding to their memorable FA Cup triumph last season.
It was a scrappy and tense start, with both sides struggling to keep possession in an electric Wembley atmosphere. But the game sparked into life almost immediately. Milos Kerkez and Florian Wirtz combined well before setting up Ekitike, who turned sharply on the edge of the area and fired home.
Liverpool, full of early intent, almost doubled their lead when Ekitike played in Salah, but the through ball was slightly overhit. Palace then had a moment of their own when Daichi Kamada went down in the box under pressure, but his appeals for a penalty were waved away.
Salah wasted a good chance on 11 minutes, misplacing a pass that could have opened up the Palace defence. Shortly after, Cody Gakpo forced Dean Henderson into action with a stinging shot from distance.
Despite Liverpool's early dominance, it was Palace who struck next. Virgil van Dijk brought down Sarr in the area, and Mateta made no mistake from the spot.
Emboldened by the goal, Palace pressed again, but Tyrick Mitchell volleyed just wide —an opportunity they would soon regret. Minutes later, Frimpong restored Liverpool's advantage, squeezing in a tight-angle shot past Henderson.
The pace of the match cooled as half-time approached, although Palace ended the half on the front foot, with Daniel Munoz delivering a dangerous ball that Will Hughes blasted over under pressure.
Liverpool resumed brightly in the second half. Ekitike went close with a header before narrowly missing again after a slick move featuring some intricate one-touch passing. Wirtz set up the chance with a sharp low ball, but Ekitike failed to keep his effort down.
Gakpo had a golden chance on 56 minutes after a clever pass from Dominik Szoboszlai, but he hesitated and the shot was blocked. Palace nearly levelled soon after when Mateta's flick almost found Sarr, who just failed to make contact despite a desperate dive.
Szoboszlai then gave the ball away cheaply, allowing Eberechi Eze to burst forward and test Alisson, who saved well with his legs. Wirtz blazed over when well-placed, and Henderson denied Szoboszlai with a brilliant stop as the match entered its final stages.
But it was Sarr who eventually found the breakthrough, curling a superb shot beyond Alisson in the 77th minute to take the contest to penalties.
In an uncharacteristic miss, Salah blazed Liverpool's first penalty over the bar. Mateta coolly converted to give Palace the advantage. Henderson then denied Mac Allister with a sharp low save.
Eze missed Palace's second effort, but Gakpo and Sarr made no mistake. Borna Sosa and Harvey Elliott both failed to convert, leaving Justin Devenny to seal the win after Szoboszlai had kept Liverpool alive with a confident strike.
Crystal Palace have launched a scathing attack on UEFA and the Court of Arbitration for Sport (CAS) after their demotion from the Europa League to the Conference League was upheld.
Tottenham Hotspur have ignited the transfer market with a daring move to outmaneuver rivals Arsenal in the race for Crystal Palace's star midfielder Eberechi Eze, while also pursuing Manchester City's winger Savinho.
Newcastle United's star striker Alexander Isak has escalated his efforts to secure a blockbuster move to Liverpool, declaring he will never play for the Magpies again.
Liverpool are intensifying their pursuit of Crystal Palace's star centre-back Marc Guehi, with the London club now actively looking to cash in before his contract nears its end.
