Following Barcelona's surprise 2-2 draw against Getafe on Saturday, the capital clubs had the chance to all but end the defending champions' ambitions.
But Diego Simeone’s team passed up the chance to open a six-point advantage as they slumped to a 2-0 defeat on the road at bogey club Levante.
Real could not capitalise on this double slice of fortune in the late kick-off and needed a brilliant equaliser from Cristiano Ronaldo in stoppage time to hold Valencia to a 2-2 draw at the Bernabeu.
Atletico found themselves behind early on when Filipe Luis diverted a corner into his own net.
Mohamed Sissoko and Diego Costa were perhaps lucky to stay on the pitch just after the half-hour.
Referee Jose Gonzalez took no action despite the Atletico forward appearing to push his head into the Mali international, who then raised his hands to Costa’s face.
Levante defended resolutely and were rewarded in the 68th minute when David Barral finished clinically on the counter-attack.
The game ended in regrettable circumstances. Levante's Papakouli Diop became involved in a heated exchange with a section of Atletico's fans and later accused them of making racist chants towards him.
Real kicked off in the knowledge that wins in their remaining four games would be enough to take the championship, but Valencia had not read that script.
Goals from Jeremy Mathieu and former Real youth product Daniel Parejo either side of Sergio Ramos' equaliser looked to have handed Juan Antonio Pizzi's side a famous triumph.
Visiting goalkeeper Diego Alves was magnificent throughout, routinely thwarting Cristiano Ronaldo, but the Portuguese finally got the better of him in stoppage time to earn a point.
At conclusion of a tumultuous day, Atletico appear best placed, knowing victory in their last two outings will see them crowned champions. The last of those matches is the highly anticipated season-closer at Camp Nou, where Real must now hope fierce enemies Barca do them a huge favour.
At the other end of the table, Ramon Azeez's last minute header moved 10-man Almeria out of the bottom three as they secured a priceless 3-2 win over relegated Real Betis.
The game exploded into after an eventful but goalless first-half when Oscar Diaz converted Aleix Vidal's cross in the 52nd minute.
Shortly afterwards, Almeria’s on-loan Liverpool midfielder Suso was given a straight red for bringing down Damien Perquis and Braian Rodriguez levelled from close range for Betis with an hour played.
Substitute Salva Sevilla drilled into the bottom corner to put the hosts in front before Vidal netted an equaliser and Azeez lit up a the thrilling climax that brought fans streaming onto the pitch amid jubilant scenes at the final whistle.
Elsewhere, Villarreal played out a goalless draw against UEFA Europa League finalists Sevilla - limiting their own chances of qualifying for next season's competition.
