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Real Madrid remain seven points behind La Liga leaders Atletico Madrid after their 10-men were beaten by Levante.
Real had defender Eder Militao sent-off after nine minutes but they took the lead soon after through Marco Asensio.
Jose Luis Morales levelled for Levante and Roger Marti scored the winner with 12 minutes remaining to make amends for his earlier penalty miss.
Leaders Atletico, who have played two games fewer than Zinedine Zidane's side, face Cadiz on Sunday (15:15 GMT).
Real boss Zidane returned to the sidelines having missed his side's 4-1 win over Alaves last weekend after testing positive for coronavirus.
He chose to partner Militao with Raphael Varane at centre-back in the continued absence of injured captain Sergio Ramos, but the pairing lasted less than 10 minutes.
Militao was initially shown a yellow card for tripping Sergio Leon outside the penalty area, before a VAR review upgraded his punishment for denying a goalscoring opportunity.
Real appeared untroubled by that set-back as Asensio finished from Toni Kroos' excellent through-ball, but Levante captain Morales' first-time strike from Jorge Miramon's cross made it level before half-time.
Marti looked to have squandered the chance to win the match when Thibaut Courtois saved his spot-kick, until he punished Real following a corner with a powerful, low shot.
It was a first defeat in 10 La Liga matches for defending champions Real, but they have lost three of their last four games in all competitions including their shock Copa del Rey exit to third-division Alcoyano.
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