Freedman, 38, was given permission to talk to Wanderers on Tuesday afternoon after a U-turn from Palace, who had initially refused to allow contact hours earlier. And Bolton have wasted little time coming to an agreement with the 38-year-old, with Palace breaking the news via an official statement.
"Crystal Palace Football Club can confirm that first-team manager Dougie Freedman has joined Bolton Wanderers," read the statement on the club's website.
"The board of the club would like to put on record their thanks to Dougie for all his efforts over the past couple of years and their disappointment over the events of the past few days. The search for a replacement starts immediately."
Freedman succeeds fellow Scot Owen Coyle at the Reebok Stadium after Coyle was sacked on October 9.
Having been unable to keep Bolton in the Barclays Premier League last term, Coyle presided over just three wins from the club's opening 11 games in all competitions this season.
Caretaker manager Jimmy Phillips duly took charge of Saturday's 3-2 home win over Bristol City as the Trotters showed spirit to come back from two goals down. But the rumour mill was already in full swing over the weekend and Bolton chairman Phil Gartside made his move for Freedman on Sunday.
The former Palace striker was named Eagles manager on a permanent basis in January 2011 and led the club to a League Cup semi-final last season.
His credentials have continued to rise this term with Palace currently riding high in fourth place in the npower Championship and on an eight-match unbeaten run, which included a 1-0 win at Bolton on September 29.