Petrescu has been in discussions with Palace and is apparently ready to take a pay cut to quit as Dinamo Moscow's head coach to join the London-based club.
But according to one of his former Romania national team team-mates Gica Popescu, Palace have yet to meet Petrescu's much-reduced salary demands.
"Dan won't sign for Palace," Popescu said.
"We had a 40-minute chat today, he told me that. I advised him not to go.
"I know why he didn't go. I know what his terms were, and also the offer."
Since Ian Holloway quit as Palace manager on October 23, the bottom-placed club in the Premier League have been linked with Aitor Karanka and Rene Meulensteen, who instead joined Middlesbrough and Fulham respectively.
Chris Coleman decided to stay as Wales head coach and Tony Pulis preferred to remain jobless than sign on at Selhurst Park.
With Popescu dropping out of the running, Iain Dowie looks the favourite to take charge of Palace, while Sean Dyche of Burnley and Ipswich's Mick McCarthy have also reportedly been approached.
