Luckless Robert Huth missed the Premiership champions' only spot-kick while south-east Londoners Charlton took the spoils with a perfect five past Carlo Cudicini.
Charlton's heroes were Marcus Bent, Jay Bothroyd, Matt Holland, Hermann Hreidarsson and Bryan Hughes.
But if team performance and dominance of play counts for anything, it should be Chelsea progressing into the next round.
It was Chelsea who took the lead in a spiky first half and the man-of-the-match John Terry was the scorer.
Four minutes before the beak, Chelsea, not for the first time had a corner. Dutchman Arjen Robben whipped over a vicious left-footer into the middle of the goal, eight yards out.
Up popped Terry, unmarked it has to be said, to arrow home a powerful header into the back of the net.
Chelsea could had had a hatful by then.
On 11 minutes, Paulo Ferreira, restored to his right-back berth for this match, finished off an excellent counter-attacking move by unleashing a powerful right-footer, on the edge of the penalty area.
Charlton goalkeeper Stephen Anderson brilliantly tipped over the bar the shot, which if it had gone in, would have being the Portuguese international's first goal as a professional.
Charlton countered, seven minutes later with a Darren Ambrose low drive which failed to trouble Cudicini.
On 23 minutes another fast break on the left saw Robben pass an inch-perfect ball to Wayne Bridge.
The left-back crossed first time for Hernan Crespo, but the Argentinian striker headed just wide of the goal.
Charlton best chance in the half, bar there equaliser came on 33 minutes when winger Dennis Rommedahl shot powerfully on goal. Cudicini did well to save it.
Following Terry's goal, Charlton got their rewards but it owned much to a horror defensive lapse by German international Huth.
A deep header by Luke Young went over the centre-back's head. He followed it and trying to head the ball back to Cudicini underhit it.
Marcus Bent, seizing the chance latched on to the ball before Cudicini could get to it and drove home a low left-footer wide of the Italian stopper.
Anderson continued his good performance by stopping a Robben right-foot shot on 57 minutes.
Jose Mourinho rang the changes on 60 minutes bringing on Frank Lampard and Joe Cole.
Lampard was unlucky with a trademark 20-yarder on 75 minutes which just inched over the crossbar.
Charlton could have nicked it four minutes from time when substitute Bothroyd unleashed a wonderful left-footer which Cudicini tipped over the bar.
A good shout for a Chelsea penalty, early into extra-time when Hreidarsson appeared to handle the ball on the by-line was dismissed by referee Alan Wiley.
Substitute Didier Drogba should have score when his free header on 101 minutes was well held by Andersen.
The game petered out and extra time moved into historic penalties and unbeaten Chelsea succumbed to the pressure and are out of the Carling Cup.