Real Madrid stumbled to a shock 1-0 defeat at struggling Espanyol on Sunday which left them leading La Liga by a single point.
Carlos Romero's 85th minute strike snatched victory for the relegation-battling hosts, provisionally 17th.
Atletico Madrid pulled within a point of Los Blancos with a 2-0 win against Mallorca earlier, ahead of next weekend's crunch derby clash at the Santiago Bernabeu.
Real Madrid were left furious after Romero was only booked for a cynical foul on Kylian Mbappe before going on to net the winner.
However, Carlo Ancelotti's side played far within themselves and did not do enough to take anything from what seemed on paper an inviting fixture.
"Espanyol played a very good game in my opinion, they defended very well, they did what they had to do. Could we have done more? Yes," Ancelotti told reporters.
The Italian coach was angry about the decision not to send off Romero.
"This foul, the decision the referee and VAR took was inexplicable, everyone saw it," continued the coach.
"It's important to protect the players. It was a clear foul, a very ugly tackle, lucky there's no serious injury.
"To us it's inexplicable that they didn't send him off."
Romero admitted he felt bad about scything down the French superstar.
"I knew Kylian is impossible to stop when he's running, I stopped him how I could, it was a bit ugly," Romero told DAZN.
"I didn't like doing it and I said sorry. That's it and there's no more to it."
Espanyol largely kept the Spanish and European champions at bay in the first half.
Real Madrid were dealt a blow when Antonio Rudiger limped off in the first half, with their Champions League play-off tie against Manchester City less than a fortnight away.
Vinicius Junior found the net with Madrid's only chance but it was ruled out after Mbappe was adjudged to have fouled his marker.
Jofre Carreras had a low shot saved by Thibaut Courtois at the other end on a rare Espanyol attack.
Madrid looked sharper at the start of the second half and Espanyol stopper Joan Garcia saved from Jude Bellingham and then Mbappe struck the post from a tight angle.
Los Blancos were furious when Romero was only booked for a cynical slide tackle from behind to hack down Mbappe as he broke over the halfway line.
Rodrygo jinked away from Romero before firing into the side netting and had another effort saved, while Garcia tipped away a vicious Mbappe strike as Madrid turned the screw.
The visitors were shocked by a swift Espanyol counter-attack which led to the breakthrough, with Omar El Hilali crossing for Romero to volley home at the back post.
Los Blancos did not create much danger in seven minutes of added time and Espanyol's fans celebrated with abandon when Mbappe lashed over a late effort to end the game.
"This win is so important for us, we had to suffer... we knew we had to do it in front of our fans," added Romero.
Atletico Madrid secured a comfortable win over Mallorca to put the pressure on, ahead of Real's match.
Samuel Lino slid home in the 26th minute after a strong driving run by Giuliano Simeone, son of Atletico's coach Diego Simeone.
Antoine Griezmann, who started the game on the bench, produced a superb lobbed finish to net the second in stoppage time and delight the Metropolitano stadium.
Atletico coach Simeone was able to celebrate his 500th La Liga match with the three points.
"I'm very happy for this journey, no doubt... it makes me very happy," he told reporters.
The Rojiblancos dominated the first half with Julian Alvarez impressing and Alexander Sorloth going close before Lino sent them ahead.
Mallorca, seventh, forged some chances of their own after the break in a tighter second period which was finally settled when Griezmann struck with a delightful chip.
On Sunday Barcelona, third, host Alaves as they try to keep on the tail of the top two.
