Albert Riera and Raul Tamudo scored on Saturday to give Espanyol a 2-1 win over Real Madrid, inflicting their first defeat of the season.
Earlier, Barcelona also lost for the first time -- 3-1 at Villarreal -- a result which dropped them to fourth place and ended a six-game winning streak in all competitions.
In other matches, Valencia beat Deportivo La Coruna 4-2, while Sevilla won 2-0 at Levante to end a run of four straight defeats.
PHOTO: REUTERS
Defending champions Madrid lead the league with 19 points. Villarreal and Valencia have 18, with Villarreal ahead on goal difference. Barcelona have 17. Espanyol come next with 16.
Bernd Schuster's team started the game at Espanyol having made their best opening since the 1991-1992 season but fell behind in the first minute when midfielder Riera headed home from a corner.
Espanyol doubled their lead in the 52nd minute courtesy of Tamudo's subtle chip which cleared Iker Casillas and floated into the goal.
PHOTO: REUTERS
Madrid defender Sergio Ramos, playing his 100th match for Madrid, reduced the home side's lead with an acrobatic shot in the 90th.
Espanyol's victory was their fourth straight, the first time they have achieved the feat since 1999.
Barcelona went down at El Madrigal stadium to Marcos Senna's two first-half penalty kicks and Santi Cazorla's opening strike which moved Villarreal into second place.
Barcelona got a goal from 17-year-old forward Bojan Krkic, who was making his full league debut.
Barcelona trailed from the third minute when Cazorla cut in from the left before passing to Guillermo Franco. The Mexico forward backheeled the ball into Cazorla's path and the midfielder sidefooted the ball home.
Worse came for coach Frank Rijkaard's team 10 minutes later when midfielder Senna scored his first penalty after Robert Pires had been tripped by Eric Abidal.
Bojan scored to cut Villarreal's lead in the 24th after receiving Lionel Messi's pass and firing a low shot just inside the post.
However, Barcelona defender Gabriel Milito then upended Pires, allowing Senna the chance to convert again in the 35th and restore his team's two-goal cushion.
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