Chelsea's unbeaten record was swept aside by a West Ham side who turned on a masterful performance at Stamford Bridge.
Paolo Di Canio made an early bid for the goal of the season trophy with a memorable 30-yard volley the angled in a second to seal the Blues fate.
West Ham defied their lowly placing in the table pushing Chelsea from the outset in a hard fought and exciting derby.
They didn't deserve to go behind after 21 minutes. Jimmy Floyd Hasselbaink's penalty was Chelsea's first shot on goal and came after West Ham had completely dominated the match from the kick-off.
The Dutch forward sent David James the wrong way as he lashed home his first Premiership goal of the season.
West Ham's equaliser, five minutes before half time, was a classic poacher's goal by Jermain Defoe. He pounced on Steve Lomas' parried shot and fired the ball in from a few inches out.
Defoe had come on after four minutes for Freddie Kanoute who had the first chance of the game, forcing a diving save from Chelsea's goalkeeper Carlo Cudicini, before limping off.
West Ham threatened to take control of the match two minutes into the second half when, with a brilliant individual effort, Di Canio volleyed in.
Subdued by West Ham's deserved lead, the Stamford Bridge crowd erupted when after 74 minutes, substitute Gianfranco Zola was brought down just outside the penalty box. Free-kick specialist Zola did not disappoint, with a superb curling strike which cleared the wall and beat keeper James in to the top of the net.
However, Di Canio angled in the winner with seven minutes remaining to earn an invaluable three points for the Hammers