Palace secured their first home win since early October thanks to Andrew Johnson's 12th minute strike as Forest defender Wes Morgan saw red at Selhurst Park.
The Eagles made a good start with surprising inclusion Julian Gray hitting the upright after only seven minutes.
It would have been a fairytale return for Gray, who upset quite a few people at Selhurst Park by refusing to sign a new contract at the start of the season.
But the midfielder soon settled in with delivery of some good crosses before Crystal Palace went in front on 12 minutes.
A Forest free-kick on the halfway line failed to reach Andrew Reid and Michael Hughes took over with a strong run through the middle before setting up Johnson who slipped the ball past Darren Ward into the left corner of the net for his 11th goal of the season.
Forest kept plugging away but their efforts were mainly off target and with 18 minutes left Morgan's late tackle on Johnson warranted a second yellow card and the ultimate red.
Wayne Routledge was a constant danger for the hosts while the tenacious Hughes was also outstanding.
For Forest, Reid was behind most of their attacks but his efforts were all in vain as the visitors failed to muster even one shot on target, as their dismal run was extended to just two wins from their last 19 matches.