Filipe Luis’ own goal after just seven minutes got the Champions League finalists off to the worst possible start and they were then denied time and again by the inspired Keylor Navas in the Levante goal.
And in their push for an equaliser, Diego Simeone’s men were caught on the counter-attack 21 minutes from time when David Barral slotted home from Victor Casadesus’ cross.
Atletico will still be crowned champions if they win their remaining two games at home to Malaga and away to Barcelona on the last day of the season, but any more slip ups will allow Real Madrid the chance to take the title should they win their remaining four games.
Atletico had enjoyed a momentous week as they progressed to the Champions League final for only the second time in their history with a 3-1 win over Chelsea on Wednesday.
However, they were chasing the game almost from the off as a corner from the right struck Luis on the chest and rebounded past the helpless Thibaut Courtois.
Navas then produced the first of a string of fine saves as he parried Raul Garcia’s effort from close range and David Villa blazed the rebound wastefully over.
The Costa Rican international then did well to turn Toby Alderweireld’s low effort to safety as Atletico ended the first-half on top.
Simeone introduced two of the goalscorers in midweek, Arda Turan and Adrian Lopez, at half-time in a bid to turn the game around and Atletico laid seige to the Levante goal early on in the second-half.
Turan saw a shot blocked when well-placed inside the area before a header from the Turkish international looped just over the bar.
Luis then nearly made amends for his own goal when he saw a shot cleared off the line before Diego Costa just failed to convert Diego Ribas’ dangerous free kick and Navas produced another wonderful save from a deflected Alderweireld effort.
Atletico were then struck with a sucker punch as Levante broke upfield and Barral was on hand to turn home Casadesus’ low ball into the box.
The visitors’ luck in front of goal was summed up moments later when Adrian’s curling effort came back off the post and rebounded to safety.
And there was to be no heroic comeback in the final quarter as a first defeat for Atletico in 15 games in all competitions left the title race wide open.