Palermo beat Juventus 2-0 in Turin to leapfrog the Bianconeri into fourth in Serie A.
Fabrizio Miccoli opened the scoring for the visitors on the hour mark before Igor Budan came off the bench to double his team's advantage nine minutes from time.
The outcome marked Alberto Zaccheroni's first defeat as coach of Juve and sees his team drop to fifth in the standings, two points behind Palermo, who now hold the last Champions League qualifying spot.
Juve dominated the encounter but their failure to finish their chances cost them dearly.
The hosts went into the game in buoyant mood having reached the last 16 of the Europa League after a 2-1 aggregate win over Ajax.
Bolstered by the return of French forward David Trezeguet from injury, the Bianconeri were determined to clinch their third league win in a row.
Juve enjoyed a strong start and had a chance to break the deadlock early on.
Felipe Melo's header from Diego's cross went over the bar.
At the other end, Juventus goalkeeper Alex Manninger made a fine save from Antonio Nocerino's right-footed strike from the edge of the area.
In the 18th minute, Giorgio Chiellini nodded form Alessandro Del Piero's cross but his effort was cleared by Palermo's defence.
The hosts should have broken the deadlock in the 24th minute.
Trezeguet's powerful header from Chiellini's cross went inches wide of the post, much to the relief of Palermo goalkeeper Salvatore Sirigu.
On the half-hour mark, Antonio Candreva served Del Piero on the edge of the area and his right-footed strike went wide.
Juve continued to press forward and Felipe Melo tried his luck from the distance but his effort went high and wide in what was the last chance of the first half.
The visitors showed more determination after the restart and came close to breaking the deadlock in the 55th minute.
Miccoli fed Javier Pastore inside the area and his right-footed strike towards the far post was met by a fine save from Manninger.
It did not take long for Palermo to break the deadlock.
Fabio Liverani served Miccoli at the edge of the area and his right-footed shot beat Manninger and struck the top right corner.
Juve thought they had equalised three minutes later only for the referee to disallow Fabio Cannavaro's goal for offside.
The hosts twice had the opportunity to restore parity.
Chiellini's bullet strike from 30 yards went just wide of the far post, while shortly after, Del Piero wasted a good chance with his direct free-kick going over the bar.
With 15 minutes remaining, Edison Cavani should have doubled his team's lead.
Cavani got behind Miccoli's great assist but struck high over the bar from 15 yards.
Shortly after, Miccoli wasted another good chance for the Sicilians.
The Italy international did well to control Mattia Cassani's effort but struck wide from inside the area.
With 10 minutes remaining, Palermo coach Delio Rossi brought in Budan in place of Miccoli and the substitute had an immediate impact.
Budan intercepted Zdenek Grygera's back-pass towards Manninger and struck his team's second from close range to kill Juve's chances of a comeback.
PALERMO LEAPFROG JUVE
