Real's victory, courtesy of goals from Karim Benzema, Sergio Ramos and Cristiano Ronaldo, maintained their three-point lead over great rivals Barcelona in second and lifted Jose Mourinho's side to 31 points from 12 matches.
Spanish and European champions Barca widened their advantage over Valencia, the last club other than the big two to win the title back in 2004, to four points.
La Liga top scorer Lionel Messi struck his 15th of the season at a damp Nou Camp, with Gerard Pique and substitute David Villa also netting against their former club and Pique's central defensive partner Carles Puyol scoring a rare goal.
An aggressive Valencia put Real under early pressure at the Mestalla but a lapse in concentration allowed Benzema to open the scoring in the 20th minute.
With the Valencia players still organising themselves, Xabi Alonso took a quick free-kick and France striker Benzema brought the ball under control with his first touch and struck a rasping volley past goalkeeper Diego Alves with his second.
Valencia dominated the second half as the yellow cards came thick and fast in response to some robust tackling before Ramos outjumped his markers to nod home a 72nd minute second.
Home striker Roberto Soldado made it 2-1 three minutes later with a powerful drive before Ronaldo scored his 14th of the campaign in the 78th and Soldado poked in his second with eight minutes of regular time left to set up a thrilling finish.
In almost the final action of the game deep into added-time, the ball appeared to strike a Real defender near his arm as he lay on the ground by the goalline but the referee waved away Valencia's frantic appeals for a penalty.
The irate home players surrounded the officials at the final whistle and Mourinho was pelted with objects as he quickly made his way down the tunnel.
ACROBATIC HEADER
In the earlier kick-off, Pique nodded Barca in front from a Xavi free-kick in the 18th minute before Messi picked up a Cesc Fabregas pass in the penalty area shortly before half-time and sent a low, right-foot shot past Roberto.
Captain Puyol followed up his own saved effort to score a third some 10 minutes after the break and Villa, who replaced Fabregas in the 66th, put Barca 4-0 ahead with an acrobatic header 15 minutes from time.
In an interview with Spanish television, Pique said Barca have a tough month ahead, including Wednesday's Champions League game at AC Milan and the first of two 'Clasicos' against Real on December 10 before they head off to the Club World Cup in Japan.
"It's a difficult month, with a lot of important games," he said. "Madrid is ahead in the league and we want to finish top of our group in the Champions League but we have the quality to come through it."
Injury-ravaged Villarreal claimed their third victory of the campaign when Borja Valero caught Real Betis goalkeeper Casto off his line with a lobbed effort in the 21st minute that gave Juan Carlos Garrido's side a 1-0 home win.
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