Adama Traore's second-half double helped Wolves stun Manchester City 2-0 to leave Liverpool eight points clear at the top heading into the international break.
The warning signs were already there for City after a flat first-half performance but Nuno Espirito Santo's decision to move Traore through the middle was a masterstroke and the winger scored twice on the counter-attack (80 & 90+4).
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David Silva did strike the woodwork for City with the scores at 0-0 but Pep Guardiola's side created little as they failed to score at home for the first time in 45 Premier League matches and succumbed to their first home defeat since losing to Crystal Palace in December.
For the first time this season, Liverpool - who edged Leicester with an injury-time penalty on Saturday - are now favourites to win the Premier League with Sky Bet.
Meanwhile, this was a timely result for Wolves, who were recording their first Premier League away of the season in a performance full of defensive cohesion and superb counter-attacking.
How Traore exposed City's frailties
Wolves were keen to target Fernandinho as a makeshift centre-back alongside Nicolas Otamendi from the first whistle and should have been in front at the break.
On five minutes, Joao Moutinho played Patrick Cutrone through on goal but the Italian looked nervous with his finish and sliced horribly wide.
Minutes later Fernandinho produced a double block, first from Raul Jimenez after he skipped through on goal and then from Cutrone's follow up.
Ederson was then called into action to deny Jimenez who again raced through unchallenged for Wolves but a combination of sloppy finishing and brave goalkeeping denied the striker.
It took City 32 minutes to record a shot on target when Raheem Sterling stung the palms of Rui Patricio from range.
City didn't really start playing with any intensity until Guardiola introduced Bernardo Silva on the hour as Wolves - who played a gruelling 90 minutes against Besiktas on Thursday - looked to be tiring.
David Silva could have given the game a different complexion on 67 minutes had his precise effort from a 20-yard free-kick not come crashing back off the crossbar.
Wolves were slipping deeper and deeper and a City goal looked inevitable but Wolves hit them with a perfect counter-attack with 10 minutes remaining to send shockwaves around the Premier League.
Jimenez led the break past Otamendi and squared one for Traore, who came into this game with only one goal in 72 Premier League appearances. But you wouldn't have known that from his finish as he calmly slid the ball past Ederson in the style of a potent striker.
Sergio Aguero wriggled free of Willy Boly's shackles in injury-time but could only shank his effort wide of the post. There would be a late goal, but it came from the visitors.
Traore raced through past some more hesitant City defending to double his account for the afternoon and hand Liverpool a big early-season advantage in the title race.
Man of the match: Adama Traore
Here we have a player that gets you off your seat but regularly frustrates the life out of you. Against City, he put it all together in a brilliant individual performance where he had to show discipline, incisive attacking and clinical finishing.
The former Barcelona winger was switched to play through the middle by his manager midway through the second half which proved to be a masterstroke. His pace and power were too much for Fernandinho and Otamendi to handle.
This could be the blueprint required to beat City with special praise also going to Boly, who made 12 clearances inside his own box. He's quickly becoming one of the best defenders in this division.
Sky Bet title odds: Liverpool title favourites
Opta stats
- City have lost a Premier League match at the Etihad Stadium without scoring for the first since March 2016 against Man Utd (0-1), with Manuel Pellegrini in charge.
- Wolves have beaten the reigning champions of the top-flight away from home for the first time since January 1984, when they defeated Liverpool 1-0 at Anfield.
- Guardiola has a 25% win rate in all competitions against Nuno (1/4) - of managers Guardiola has faced at least three times while in charge of Manchester City, only against Ronald Koeman (0%) and Jurgen Klopp (22%) does he have a worse win rate.
What the managers said
Nuno Espirito Santo: "I'm very, very proud. It was a very good performance. More than the performance was the work that the players put in - they ran.
"It's very difficult to play against City, they are so good and move the ball so fast. It requires a lot of high speed running and it was good."
Pep Guardiola: "It was a bad day.
"That sometimes happens. We started quite well and then we conceded two situations with two loose balls in our build-up - we got a little bit nervous. That sometimes happens. There's a lot of games to go.
"We lost to a good team. They're physical and strong in the air and fast on the counter-attack and that's why."
What's next?
Manchester City are back in action after the international break with a trip to Crystal Palace, live on Sky Sports. Meanwhile, Wolves host Southampton.