City, who had won all nine home games in the league this season, are in second place on 44 points with Liverpool, who won 2-0 at Wolves on Friday, on 48.
Crystal Palace put three goals past defending champion Manchester City, including a stunning strike by Andros Townsend, to win 3-2 on Saturday in the biggest upset of the English Premier League so far.
Andros Townsend has scored a goal of the season contender - if not the actual award victor - against Manchester City.
But after Ilkay Gundogan had handed them the ideal start, City were undone by goals from Jeffrey Schlupp, Townsend and a Luka Milivojevic penalty - all three coming in an 18-minute spell. The ball eventually landed to Townsend around 35 yards from goal who let go with a rocket that sailed into the roof of keeper Ederson's net.
CLIVE BRUNSKILL GETTY IMAGESManchester City lost at Etihad Stadium for the first time since April
The fear for Pep Guardiola however will be how Crystal Palace made so much of their rare ventures forward.
Another City substitute, Kevin De Bruyne, pulled it back to 3-2 on 84 minutes when his cross luckily drifted in at the far post. Palace full back Aaron Wan-Bissaka's cross was headed against the post by Townsend, before Max Meyer's sprint towards the loose ball was abruptly halted by a rash sliding challenge from Kyle Walker.
But Palace trailed for just six minutes as they surprised City by pushing back.
A run of two wins in 12 games led to media speculation that Claude Puel's job as Leicester coach was in jeopardy.
Crystal Palace inflicted a second loss of the season on Manchester City. City had started to lose their way in the game until De Bruyne entered the field.
The victory came 28 years to the day since Palace last won an away game at City but, more importantly for the current league table, ended a dominant run of form by Pep Guardiola's team against the division's so-called lesser teams.
He said: "The third goal, the penalty, was really tough for us".
Unbelievable work rate, good pace on the counter-attack and a wonder goal to boot; Andros Townsend will never forget his Christmas miracle of a trip to the Etihad in 2018.
"When you have a lot of games, everyone has to play".