The winger had agreed to join the Black Cats in a deal worth £30 million, and now Palace are reportedly involved, as per L'Equipe.
The 21-year-old is expected to travel to England for a medical, and it is up to him which club he decides to join - although a link up with former manager Pierre Sage would be on the cards in London.
Sunderland have offered Fofana a five-year-deal at the Stadium of Light, and Palace reportedly have the same deal on the table.
Fofana is eager to compete in Europe, with Sunderland and Palace having both qualified for the UEFA Europa League this season.