Norwegian forward Strand Larsen completed his move late on transfer deadline day on Monday (local time), making him the London club's second big buy of the window after they paid Tottenham Hotspur $69 million - at the time a club record - for Brennan Johnson.
However, they lost captain Marc Guehi to Manchester City in January.
Strand Larsen scored 14 goals in his first season at Wolves after moving from Celta Vigo in 2024 and has continued to look sharp this season, though goals have been sparse in a struggling side. Palace said he has signed a four-and-a-half-year contract.
Palace are also still hoping to bring in midfielder Dwight McNeil from Everton for $39 million, English media reports said.
French international Mateta, who has been wrestling with a knee injury, had an initial medical examination with Milan on Sunday, but after additional tests on Monday, the Italians pulled out of the deal, reported to be about $60 million.
On a low-key deadline day, Liverpool agreed a $120 million deal for 20-year-old centre back Jeremy Jacquet, but he is set to stay with French club Rennes until the end of the season.
Atletico Madrid have signed Nigeria forward Ademola Lookman from Atalanta for about $60 million, which will make him the first English-born player to have played in the Premier League, Bundesliga, Serie A and LaLiga.
The transfer window has closed in England, France, Italy and Germany but stays open for four more hours in Spain and Belgium and until Tuesday in Portugal and the Netherlands.
Some signings not yet announced can still go ahead if the paperwork is "in motion."
