Nicola Sansone scored a late winner as Inter relinquished their grasp on the Scudetto and failed to return to the Serie A summit after a 2-1 defeat at Bologna on Wednesday.
Milan regained top spot in the league with late victory at Lazio on Sunday and Inter made a good response in their game in hand at Stadio Renato Dall'Ara when Ivan Perisic struck after just three minutes.
Marko Arnautovic restored parity against his former side 25 minutes later, though, and Sansone profited from an Ionut Radu mistake with nine minutes remaining to seal an unlikely victory.
Defeat left Inter two points behind leaders Milan with four games left to play as the neighbours battle for the title.
Perisic blasted Inter into an early lead in expert fashion, nutmegging Musa Barrow before powering a left-footed thunderbolt into the top-right corner.
A stinging drive from Federico Dimarco tested Lukasz Skorupski, before Lautaro Martinez wastefully fired over a presentable rebound to double the lead.
Arnautovic then levelled things up by heading Barrow's left-wing cross into the bottom-right corner, while Denzel Dumfries spurned a headed chance from Perisic's centre at the other end.
Dimarco blazed over after the interval and twice tamely found Skorupski's hands when unmarked from the edge of the area, before the Bologna goalkeeper denied Milan Skriniar's goal-bound header.
Inzaghi sent on forwards Edin Dzeko and Alexis Sanchez in search of a late winner, but it was starting striker Martinez who headed over Hakan Calhanoglu's corner.
Radu then handed Bologna victory as he missed a simple Perisic pass backwards, with Sansone converting a simple tap in to punish the Inter goalkeeper.
What does it mean? Inter falter in Scudetto charge
Reigning champions Inter were unbeaten in 15 previous visits to Bologna in Serie A and dominated once more but were punished for failing to make their dominance pay against Miroslav Tanjga's side.
Indeed, the visitors fired 26 shots to Bologna's five, but the profligate nature of the Nerazzurri came back to haunt Simone Inzaghi's side. Inter will now have to rely on leaders Milan slipping up in their last four games to overturn the two-point deficit.
Arnautovic came back to thwart his former side, with his first-half header dragging Bologna back into the contest.
The Austria international has scored 13 goals in Serie A this season, his highest tally in a single campaign across Europe's top five leagues.
Martinez had scored four goals in three games across all competitions, including a Coppa Italia semi-final brace against Milan on Tuesday, but failed to leave his mark at Bologna.
The Argentina international squandered a great first-half opening, one of a game-high six shots he attempted, though the striker only found the target with one of those.
Key Opta Facts:
- Arnautovic is the first Bologna player to score 13 goals in a single Serie A season since Alberto Gilardino in 2012-2013 (also 13).
- He has scored in three consecutive games for a single team for the second time in the top five European leagues, after doing so in December 2017 with West Ham.
- Perisic has been involved in six goals in his last six league games (one goal, five assists).
Inter will look to respond in their title charge when they visit Udinese on Sunday, while Bologna travel to Roma on the same day.