Warnock, who took the reins at Selhurst Park in October, guided the resurgent Eagles to an unbeaten December.
Palace collected 17 points from a possible 21 and have moved from the fringes of the relegation zone to eighth place in the Championship table.
He won the award ahead of Gary Johnson of Bristol City, Tony Pulis of Stoke City and West Bromwich Albion's Tony Mowbray.
"When Neil Warnock took over he claimed it would be the hardest job he would ever have as a manager," said Chris Kamara, chairman of the awards panel.
"But just under three months into the job he has worked miracles at the club and their transformation has been incredible.
"Palace are a side high in confidence and playing some excellent football and their unbeaten month in December has seen them rise to within striking distance of a play-off place."
Swansea manager Roberto Martinez took the League One award, with Paul Ince recognised as League Two's top boss.