Liverpool were the big winners of the day as the gaps left in City's defence by the injured Aymeric Laporte were exposed at Carrow Road.
London: Manchester City succumbed to a first Premier League defeat since January in stunning fashion to newly-promoted Norwich 3-2, as Liverpool opened up a five-point lead at the top of the table by beating Newcastle 3-1.
Tottenham and Chelsea bounced back to form with comprehensive wins over Crystal Palace and Wolves respectively, while Manchester United held out for a much-needed three points with a 1-0 victory over Leicester.
However, Liverpool were the big winners of the day as the gaps left in City's defence by the injured Aymeric Laporte were exposed at Carrow Road.
"Of course it is a special day for us and for the club," said Norwich boss Daniel Farke.
"We had to be special in our plan for City because they are the best team in the world and we had setbacks too with our injuries, but we deserved the win today. We were exceptional."
Kenny McLean showed up the champions' struggles to defend set-pieces with a towering header to open the scoring and Teemu Pukki then squared for Todd Cantwell to make it 2-0 inside 28 minutes.
City regained their composure and got a foothold in the game before half-time when Sergio Aguero headed home Bernardo Silva's cross.
However, with Laporte out till January at least with a serious knee injury, Pep Guardiola has problems to solve at the heart of his defence as John Stones and Nicolas Otamendi gifted Norwich a third at the start of the second half.
Emiliano Buendia robbed Otamendi on the edge of his own box and set up Pukki to prod home.
City rallied late on, but Rodri's first goal for the club two minutes from time was too little, too late.
"I know what we are as a team, what we have done, what we are going to do again, and I love my players. It is a pleasure and honour to be with them," insisted Guardiola.
"That is the challenge at a high level. The people cannot expect all the time (to) win."
- Liverpool turn up in time -
Liverpool also fell behind early on to Newcastle as Jetro Willems brilliant finish saw the Reds trailing at Anfield for the first time since March.
Sadio Mane fired into the top corner to start the revival, but it was the introduction of Roberto Firmino off the bench for the injured Divock Origi that truly turned the tide in Liverpool's favour.
The Brazilian's through ball was spilled by Martin Dubravka to allow Mane a simple task for his second just before half-time, and another brilliant Firmino flick teed up Salah to seal the points 18 minutes from time.
"I started enjoying after 25 minutes, around about when we arrived finally in the game," said Liverpool manager Jurgen Klopp.
"Second-half we scored only one goal, but we played really good football and I liked it a lot."
- Relief for Lampard -
Frank Lampard has endured a difficult start on his return to Stamford Bridge as a manager, but he enjoyed his finest day so far in charge Chelsea with his faith in youth again fully vindicated in a 5-2 win at Wolves.
Tammy Abraham was the star of the show with a hat-trick, but Fikayo Tomori also scored his first goal for the club and Mason Mount completed a perfect day for three graduates of Chelsea's academy.
"All three goals were so different, it just shows what he can do," said Lampard of Abraham, who now has seven goals in three games.
"I am so delighted for him. I know how hard the academy works and Tammy has an enthusiasm to score goals. He has a fantastic approach to the game and how he wants to progress."
Tottenham manager Mauricio Pochettino said David Beckham asked to play for his side so impressed was the former England captain with Spurs first-half demolition of Palace in a 4-0 win.
All four goals came before half-time with Son Heung-min scoring twice either side of Patrick van Aanholt's own goal before Erik Lamela rounded off the scoring.
"I was talking to David Beckham just now and he said, 'I wish I could still play football and play now for Tottenham because this stadium is amazing. I wish I could play here and play for you!'" Pochettino said.
United had to suffer far more for just a second win in 10 league matches.
Rashford shrugged off his recent miss from the spot in defeat to Palace to convert a penalty on eight minutes after he had been brought down by Caglar Soyuncu.
United, Chelsea, Tottenham and Leicester are all now level on eight points from five games behind the top two.
"We hung in there. It was the first time this season where we have had to defend for large periods," said United boss Ole Gunnar Solskjaer.
Jeff Hendrick struck a late equaliser for Burnley to secure a 1-1 draw at Brighton after Neil Maupay's opener for the Seagulls.
Southampton were 1-0 victors at Sheffield United courtesy of a brilliant strike from Moussa Djenepo.