In-form Payet leaves Lyon reeling
Payet, the league's leading scorer, curled a fine 75th-minute free-kick into the top corner to give Les Verts their first win at the Gerland stadium since 1993.
Visiting St Etienne, who had not beaten their arch-rivals since 1994, have 16 points from seven games while Lyon are second from bottom on five points.
Elsewhere, Olympique Marseille geared up for their midweek Champions League clash at Chelsea with a 2-1 home win over Sochaux taking them up to fifth on 11 points.
Marseille, with Souleymane Diawara back from injury in central defence, were quickly rewarded for their efforts at a windswept Stade Velodrome when a Taye Taiwo cross-cum-shot from 30 metres went into the top right corner after 19 minutes.
"I did it on purpose. I saw the keeper was off his line," Nigeria defender Taiwo told the Foot Plus TV channel.
Lucho Gonzalez made it 2-0 just after the hour when he coolly slotted home after a long throw by defender Cesar Azpilicueta.
Nicolas Maurice-Belay scored a consolation goal in the 75th minute for Sochaux.
Stade Rennes are in second place on 15 points after goals by Stephane Dalmat and Victor Montano clinched a 2-1 victory at Nice.
At the Gerland, Lyon hit the woodwork three times through Bafetimbi Gomis, Jimmy Briand and Jeremy Toulalan but it was St Etienne who prevailed.
Les Verts, who last week reached the top spot for the first time since 1982, were not only grateful to Payet for his goal but also for twice clearing off his own line.
At the final whistle the Lyon players slumped to the ground while their opponents ran towards the 2,100 St Etienne fans who had made the 60-km journey.
"We wanted our own piece of history," Payet told the Orange Sport TV channel.
The goal-scorer is now hoping to be called up by France on Thursday for the next batch of Euro 2012 qualifiers.
Lyon fans called on Claude Puel to resign but president Jean-Michel Aulas said the coach would be staying.
"The situation is serious but we played a good game tonight," Aulas told Canal Plus television. "The result is unfair.
"We were denied a penalty for handball in the box and there was absolutely nothing on the so-called foul that led to Payet's free-kick. I don't think it's time to change coach."
Lyon now face a tricky trip to Hapoel Tel Aviv in the Champions League on Wednesday.
Promoted Arles-Avignon slumped to their seventh defeat in as many games when they lost 3-1 at 10-man Montpellier.