Promoted Xerez came from behind to beat Villarreal 2-1 and notch up their first ever La Liga victory, sending the visitors to the foot of the standings.
Atletico were torn apart 3-0 by Osasuna, conceding all three goals inside the first half hour in Pamplona.
Xerez, who had scored one goal and collected just two points from their first six matches in the Spanish top flight, fell behind to a 17th-minute goal from Robert Pires [ Images ].
But Villarreal, who were also seeking their first win under new coach Ernesto Valverde this season, were full of nerves and were pegged back to 1-1 when Mario Bermejo headed in at a corner before the break.
Against the run of play, Xerez scored a controversial winner 10 minutes from time when Villarreal goalkeeper Diego Lopez's clearance struck an attacker's arm and Antonito lobbed the ball back into the empty net.
Xerez climbed to 18th with five points, one ahead of Malaga, who lost 2-1 to Almeria, and Villarreal who have three.
"We were lucky but you have to go looking for luck," Xerez coach Jose Angel Ziganda told reporters.
"This is a small step, but very important from a psychological point of view...now we aren't bottom anymore."
Valverde bemoaned the referee's decision for the winning goal and brushed off questions over his future.
"Coaches are always playing for their positions," he said. "Now we are bottom and we can't go down any further so the only way is up."
Atletico's defence was unable to cope with the aerial power of Walter Pandiani against Osasuna, the Uruguayan striker diving to head the first after only four minutes.
He headed his second from a free kick in the 25th minute and Carlos Aranda put away the third four minutes later to leave Atletico with just one league win this season. Abel Resino's side lie 15th with six points from seven matches.
Leaders Barcelona [ Images ] top the standings with 19 points despite being held to a 0-0 draw in Valencia on Saturday.
Real Madrid [ Images ] closed the gap to one point with a 4-2 victory over Real Valladolid.
Sevilla are third despite losing 1-0 to Deportivo Coruna who drew level with them on 15 points.
Two goals from Aritz Aduriz helped Real Mallorca [ Images ] up to fifth on 13 points in a 3-1 victory over Getafe. Valencia are sixth with 12.