Atletico Madrid came from behind to beat Athletic Bilbao 2-1 and move level on points with Barcelona at La Liga's summit, while Real Madrid lost 1-0 at Villarreal on Sunday.
Roberto Soldado put Marcelino's men into a shock early lead at El Madrigal and despite creating a host of chances, Rafael Benitez's side could not find an equaliser.
Karim Benzema was particularly guilty of failing to take his opportunities in his first game since being suspended from the France national team.
Madrid's defeat leaves them five points off the top of the La Liga table after 15 matches of the season, while Villarreal are in fifth place.
Antoine Griezmann smashed in a sensational winner to hand Diego Simeone's Atleti an eighth straight win in all competitions, a result that took advantage of Barcelona's 2-2 draw with Deportivo La Coruna on Saturday.
The visitors had taken a deserved lead when Aymeric Laporte turned in a corner, but another set piece provided the equaliser when Saul headed home Koke's cross.
Griezmann's brilliant finish, his 13th goal of the season, completed a fine comeback for Atletico.
Gary Neville's first league game in charge of Valencia ended 1-1 at Eibar, with both sides reduced to 10 men. A late own goal by David Junca cancelled out Sergi Enrich's first-half goal, while Lucas Orban and Ivan Ramis were both dismissed.
Malaga climbed out of the relegation zone with a 2-1 win at fellow strugglers Real Vallecano, Duje Cop scoring a late winner to send the hosts down into the bottom three.
