Denman never looked completely comfortable on his return
Cheltenham Gold Cup winner Denman could only finish second to Madison Du Berlais on his return to action in the Levy Board Chase at Kempton.
The Paul Nicholls-trained star had been out of action for 11 months after treatment for a heart problem.
Although he was well up with the pace early on, Madison Du Berlais, under Tom Scudamore always looked dangerous.
The pair pulled clear of the rest of the field but the winner stretched away five out and went on for an easy win.
It was Denman's first defeat over fences and his tired-looking display prompted bookmakers to replace him as favourite for this year's Gold Cup with stablemate Kauto Star, the winner in 2007.
Madison Du Berlais, trained by David Pipe, was winning his second big race of the season after triumphing in the Hennessy Gold Cup at Newbury in November and is now around an 8-1 chance to triumph at Cheltenham on 13 March.
Denman's jockey Ruby Walsh said afterwards: "I'd be lying if I said I wasn't disappointed. I thought it would be a matter of just turning up.
"In fairness to David Pipe and Tom Scu, they knew they were up against a horse that hadn't run for a long time and they turned it into a slog.
"It took me a bit to get him involved and to get him on an even keel. But I got him interested down the back and he travelled great. But Tom Scu upped it a gear and had me struggling.
"He was fairly tired (at the finish), but we consolidated our position without tiring him into the ground."
It is quite possible that last year was the once-in-a-lifetime performance from him and he might not produce that again
Nicholls added that the nine-year-old would have to improve significantly to be involved in the shake-up for this year's Gold Cup.
"It was good to get him out and we are happy enough with him. He has jumped and galloped and the run will bring him on," he said.
"We have done our best and he will improve a bit for the run but we have got to accept he might not be as good as he was. The Gold Cup got to the bottom of him and he took a lot of time to get over it.
"I couldn't have run him anywhere after it and if you watch the replay he got very tired, and then we had the heart problem when he came back in.
"He wasn't at his brilliant best today and he does need to improve - there is no point saying otherwise.
"He's got to improve between now and Cheltenham - it is quite possible that last year was the once-in-a-lifetime performance from him and he might not produce that again, especially after the problems he has had."
Of the other runners, Joe Lively who finished fifth, will miss the rest of the season after suffering a leg injury during the race.
Levy Board Chase (Kempton)
1. Madison Du Berlais (T Scudamore) 12-1
2. Denman (R Walsh) 8-11 Fav
3. Albertas Run (A P McCoy) 4-1