In an entertaining game laden with chances but seemingly set to finish as a draw, the 18-year-old Nigerian pounced on Samir Nasri's saved effort to rifle home in the 90th minute.
Sports Mole looks over each aspect of the game to determine whether Man City were worthy winners.
On target: 2
On target: 7
Was the result fair?
Man City were certainly the better side on the pitch, dominating possession and weighing in with 21 efforts, though their toothlessness was emphasised by the fact that only seven were on target - Jesus Navas missing an open goal was a particularly galling moment for City - and even those weren't particularly dangerous. Palace barely put a foot wrong against their more illustrious opponents and will feel hard done by to lose the game right at the end, but based on the balance of play, Pellegrini's charges just about deserved their win.
As mentioned above, the Eagles didn't really put a foot wrong against the 2012 and 2014 champions, holding their own for the majority of the game and very nearly breaking the deadlock late on through Dwight Gayle just minutes before Iheanacho's winner. Alex McCarthy may have been a tad sloppy when parrying Nasri's strike into the path of the Nigerian teenager, but this is being particularly stern on the Palace goalkeeper as he made plenty of good saves to keep his side in the game. Similarly, there were no standout players in outfield for either good or bad reasons - they were all decent enough and put in a shift to stifle their opponents.
Man City's performance
City weren't their usual rampant selves at Selhurst Park as the day's opposition was well drilled and gave them a game - their incisiveness in attack which saw them score 10 goals in four games was absent today, as many players took to firing ambitious pot-shots at goal or, as in Navas's case, miss an open goal. This could be blamed on Sergio Aguero's early withdrawal through injury at the hands of a Scott Dann challenge which saw his side reeling afterwards, and even though Kevin De Bruyne was impressive enough on his first shift for his new club, Aguero's flair and talent is difficult to replace. In the end it didn't prove a big deal as they managed to get the ball in the back of the net through Iheanacho's late strike.
Sports Mole's man of the match
Samir Nasri: The French midfielder was a constant in City's more incisive attacks of the day. He linked up well with Wilfried Bony and De Bruyne, was bright on the ball, and his late shot caused McCarthy to deflect the ball into the path of Iheanacho for the winner.
Though it didn't cost his side the game, Navas was left with the proverbial egg on his face five minutes after the restart when he managed to get all the way to the Palace goalmouth and round McCarthy but, when it came to a seemingly easy shot into an open goal, he couldn't manage this - the ball went wide.
Mike Jones may come under scrutiny for a number of decisions during the game, not least showing Scott Dann a yellow for a crunching tackle on Sergio Aguero which caused the Argentinian to leave the pitch prematurely. Yohan Cabaye's challenge on Samir Nasri in the box could have also been given as a penalty by some referees.
Crystal Palace: The Eagles, who slip to third in the Premier League table, travel to Tottenham Hotspur on Sunday, September 20.
Manchester City: The Citizens, five points clear at the top of the Premier League table, host Juventus in the Champions League on Tuesday, September 15.