Chelsea slumped to a shock defeat as injury-hit Real Betis threw their Champions League group wide open.
Dani scored for Betis from close range after 28 minutes to ensure they remain a threat to Chelsea and Liverpool in the battle to reach the knockout stage.
Chelsea were desperately off-colour, although they were denied a second-half leveller when Michael Essien's shot bounced off both posts.
Betis are now one point behind Chelsea and still have to travel to Anfield.
Chelsea also picked up five yellow cards, with Shaun Wright-Phillips ruled out of the next game against Anderlecht in Belgium.
It was an amazing reversal of fortune for Betis, who were thrashed 4-0 at Stamford Bridge and went into the game on the back of four successive defeats.
And it continued Chelsea's miserable run of form on their travels in the Champions League.
Chelsea left Didier Drogba on the bench, giving a rare opportunity to Eidur Gudjohnsen in attack.
Betis desperately needed a victory to keep their hopes of qualifying for the knockout stages alive - and they started with real purpose.
But they suffered two early injury blows, with Nano limping off and then influential striker Ricardo Oliveira, who suffered a knee injury as he was robbed in the penalty area by Ricardo Carvalho.
Dani came on for Oliveira, and made an immediate impact by putting Betis ahead after 28 minutes.
Capi's cross was cleverly dummied by Edu, and with William Gallas slow to react, Dani stabbed a close-range finish past Petr Cech.
The setback galvanised Chelsea, who then enjoyed their best spell of the game, with Pedro Contreras saving well from Joe Cole and Arjen Robben.
Gudjohnsen wasted Chelsea's best chance two minutes before the interval, shooting hopelessly over the top when sent clear by a long pass from John Terry.
There was another scare for Chelsea in first-half injury time, when Cech parried Edu's swerving shot and Dani sent the rebound agonisingly wide.
Chelsea boss Jose Mourinho was clearly unhappy with Chelsea's first-half display, and took typically bold action, replacing Cole and Gudjohnsen with Wright-Phillips and Drogba.
Betis changed approach after the break, looking happy to protect their lead - but Chelsea were once again lacking punch in attack.
Mourinho played his final card after 64 minutes, sending on Damien Duff - fit-again after knee surgery - for the subdued Robben.
Robben was clearly disappointed to be substituted, but he had little cause for complaint.
Chelsea did everything except equalise in a remarkable incident with 19 minutes left.
Duff's cross narrowly evaded Drogba, but Wright-Phillips pulled the ball back for Essien, whose shot hit both posts and somehow stayed out.
Betis hit back, and Cech needed to produce a fine save to stop Capi's shot from the edge of the area.
And despite plenty of possession in the closing stages, Chelsea failed to mount any sort of sustained threat.
Real Betis: Contreras, Varela, Juanito, Nano (Castellini 20), Melli, Joaquin, Rivera, Arzu, Edu, Capi (Fernando 84), Oliveira (Dani 25).
Subs Not Used: Doblas, Xisco, Juanlu, Israel.
Booked: Capi, Varela, Melli, Contreras, Dani.
Goals: Dani 28.
Chelsea: Cech, Paulo Ferreira, Ricardo Carvalho, Terry, Gallas, Essien, Makelele, Lampard, Joe Cole (Wright-Phillips 46), Gudjohnsen (Drogba 46), Robben (Duff 65).
Subs Not Used: Cudicini, Geremi, Bridge, Huth.
Booked: Joe Cole, Robben, Drogba, Wright-Phillips, Duff.
Ref: Alain Hamer (Luxembourg).