Lazio were unable to apply further pressure on Serie A leaders Juventus as they had to rely on a late Hernanes penalty to take a point at lowly Palermo.
The Biancocelesti could have drawn level at the top, ahead of Juve's late kick-off against Udinese, but were undone by two second-half goals in as many minutes.
Arevalo Rios cancelled out Sergio Floccari's early opener with 20 minutes to go and Palermo took a shock lead moments later through Paulo Dybala.
Gian Piero Gasperini's strugglers failed to hold on though as Hernanes converted an 84th-minute penalty after Floccari was felled in the area by substitute Ezequiel Munoz.
A fourth successive win last weekend had lifted Lazio three points behind Juventus and the capital club - still without Miroslav Klose - looked ready to go level at the top when Floccari struck after 10 minutes.
Palermo goalkeeper Samir Ujkani had already done well to keep out Hernanes' long-range drive, with barely a minute on the clock, before he was left helpless to stop Floccari's header.
The striker expertly looped the ball over the stranded Ujkani after Cristian Ledesma's long pass cut open the defence.
Federico Marchetti maintained the Lazio lead with a smart save to deny Fabrizio Miccoli's turn and shot.
The visitors remained 1-0 ahead into the break and should have doubled their advantage on 62 minutes only for a dubious offside call. Floccari was perfectly picked out by Stefano Mauri but the flag went up.
The decision took on greater relevance when Palermo struck twice in quick time to go ahead.
Rios got the first when he had the simplest of tasks to tap in after Andrea Dossena's perfect delivery from the left.
A minute later Lazio were left stunned as Josip Ilicic burst down the right before Miccoli passed for Dybala to score.
The title challengers did manage a reply though, with Hernanes converting from the spot after Munoz's poor challenge on the influential Floccari.