The hosts established control before the interval through Corentin Tolisso, who scored in the eighth minute, and Ernest Nuamah, whose goal in first-half stoppage time left Palace facing a two-goal deficit.
Crystal Palace improved after the break and Yéremy Pino pulled one back in the 50th minute. However, Pavel Šulc restored Lyon’s two-goal advantage with a clever flick in the 76th minute, leaving the visitors needing another response.
Daichi Kamada struck in the 81st minute to set up a tense finish, but Lyon resisted Palace’s late pressure to secure the points.
Palace manager Pierre Sage was frustrated by the contrast between his team’s two halves, believing their sluggish start had made the task too difficult.
“It was a game of two different halves,” Sage said. “We were absent in the first-half. The second-half is more like what we’re used to seeing.
“We can be frustrated with the result, but we can be frustrated with the first-half. Going two goals down meant this was too difficult to turn around.”
Sage said the opening performance fell short of the standards required in European competition.
“We play the game to win. But when you miss the first-half performance, I have to be frustrated with that.
“We cannot accept this. We have to take the lesson from here today.
“We didn't fight enough, we didn't manage some of the tactical problems and we were not proactive with the ball.
“If we want to be competitive, we need to be better in these areas.”
Despite the defeat against his former club, Sage was already focused on Sunday’s meeting with Brighton, urging his players to carry their improved second-half display into the next match.
“We have to turn the page quickly and take the lesson. Now the most important game is the game in Brighton.
“This evening we cannot change what happened on the pitch. We want to improve on Sunday.
“We will rest and make sure we prepare the right way. This is really important.”
Sage also offered an encouraging update on Jean-Philippe Mateta, who missed the trip to France.
“There might be some chance of seeing him this weekend – he’s on track with his rehabilitation.”
Lyon coach Paulo Fonseca, speaking to UEFA, was pleased with his side’s first-half dominance and believed the victory was deserved.
“I really liked our performance, especially in the first half. We controlled the game with the ball, defended very well and didn't allow Crystal Palace any chances. At 2-0, the players naturally started thinking more about protecting the lead. But we had some really good attacking moments, played with the right intentions and I think we fully deserved to win.”
Palace’s unbeaten run ended at three matches, leaving Sage with an immediate challenge to address the first-half shortcomings before the visit to Brighton.