The former Newcastle defender and his representatives traveled to England to speak to the Black Cats last week but the two parties failed to agree personal terms.
Alan Pardew remains an admirer of the Italian having worked with him during his time in charge of Newcastle, and, according to Tutto Mercato, Palace are working on a deal to bring him to south London.
Inter are awaiting an official offer from Palace before giving the 25-year-old permission to speak to the Eagles but a £3m deal is expected to be reached this week.
When asked why Sunderland were unable to land Santon, manager Sam Allardyce said: “There’s no doubt that the one big thing I have to cover is striving hard every single day on the phone with all our recruitment people to find the right deal for the right player.
“It was a huge disappointment for me that I was not able to clinch the Davide Santon deal, just a couple of days ago.”