Juve suffer first defeat of season
Palermo coach Walter Zenga was under pressure before kickoff but the Sicilians were rewarded for a good start when a mistake by Felipe Melo led to Uruguayan striker Edinson Cavani scoring at the near post with a fierce effort.
Third-placed Juve's hopes of going top were effectively ended when Brazilian Fabio Simplicio slipped through the offside trap and turned in a free kick three minutes before halftime.
Giampaolo Pazzini's excellent header had earlier helped Sampdoria draw 1-1 at home with Parma to move joint-top with champions Inter Milan, who beat Udinese 2-1 on Saturday.
Inter's city rivals AC Milan continued to struggle after seven games with halftime substitute Ronaldinho striking six minutes from time to snatch a 1-1 draw at 10-man Atalanta.
The Brazilian chested down defender Alessandro Nesta's ball and poked in to score Milan's first goal in four games.
Joint-bottom Atalanta took the lead when Simone Tiribocchi swept the ball home and they were then unfortunate to have Ivan Radovanovic harshly sent off on 39 minutes for two bookings.
"I wouldn't say it's a renaissance," Nesta, a rare bright spot for Milan this term after returning from a year out injured, told Sky television.
"We are still struggling, we've got to be humble and understand that. The problems will only be resolved when we win."
Coach Leonardo was given a vote of confidence after the 1-0 home defeat by FC Zurich in the Champions League in midweek and now has the two-week break for international games to find a solution to the slump.
Napoli boss Roberto Donadoni is also clinging to his job after a 2-1 defeat at injury-hit AS Roma, where Francesco Totti netted twice to go joint-eighth with Gabriel Batistuta on the Serie A all-time goalscorers list with 184.
Argentine forward Ezequiel Lavezzi opened the scoring for Napoli on 26 minutes after Roma had already made two substitutions including goalkeeper Julio Sergio.
Totti hit back with a lucky strike and a good finish before suffering an injury with Roma having used all their changes.
Fiorentina, third with Juve, drew 0-0 with Lazio despite Alberto Gilardino's effort looking over the line on replays.
Genoa are fifth after ruining Bologna's 100th anniversary party with a 3-1 away victory. In-form Chievo won 2-1 at Cagliari thanks to Michele Marcolini's double and 10-man bottom side Livorno drew 0-0 at Siena, who missed a penalty.