After five straight wins in La Liga and two more in the UEFA Champions League, Real Madrid's perfect start to the 2009-10 campaign came to an end. The loss left the Merengues tied with Sevilla for second place behind defending champion Barcelona.
Real Madrid was playing without Cristiano Ronaldo, who injured his ankle in a hard challenge by Senegalese defender Souleymane Diawara in Wednesday's Champions League game against Marseille.
"We played really well and are on a roll at the moment," said Sevilla star Luis Fabiano. "If we continue playing like that we can compete with Real and Barca at the top."
Real contained the Brazilian star, who had been so instrumental in Sevilla's six-game winning streak going into Sunday's game, but winger Jesus Navas and midfielder Renato scored on headers to lead Sevilla past Real.
Sevilla dominated the first half and should have won by a larger margin. Keeper Iker Casillas made several outstanding saves to keep Real in the game.
"We knew we would lose at some stage," said Real midfielder Kaka. "We were beaten by a good team and we need to improve some things. It was an intense game in which we created chances but we made mistakes from set-pieces and got punished."