Defender Dorin Goian scored the only goal as Palermo shocked Serie A leaders Milan to win 1-0.
Goian netted the only goal of the game after 10 minutes as the Sicilian outfit moved up to seventh in the table to boost their outside hopes of European qualification.
Defeat leaves Milan five points ahead of city rivals Inter having played a game more.
Lazio moved above Udinese into fourth place in the table thanks to victory over Cesena at the Stadio Olimpico.
A goal from Mauro Zarate after just 88 seconds was enough to lift the Biancoceleste back into the race for a place in the Champions League next season and leave Cesena in danger at the other end of the table.
The home side had chances to make it a more comfortable win and almost paid the price for not doing so as Cesena fought spiritedly until the final whistle, albeit without creating any real chances.