The 26-year-old forward has been expected to leave Leicester this summer following their relegation from Premier League last season.
Crystal Palace are light in their attacking department and Roy Hodgson is pushing to sign a centre forward this summer.
Iheanacho is wanted by Crystal Palace, who are prepared to pay between £10m and £15m to snap him up.
Leicester have put an asking price of £18m on Iheanacho though, causing an issue in the talks.
The negotiations between the two teams are stalling as a result, according to Sky Deutschland.
Iheanacho joined Leicester from Manchester City in the summer of 2017 and has scored 69 times in 210 outings for the Foxes.
The Nigerian international is in the final year of his contract and it would like the chance to move to Crystal Palace this summer.