Saturday's result leaves Real Madrid seven points behind league leaders Atletico Madrid, who have two games in hand and just a point ahead of Sevilla, who won away to Eibar earlier in the day, reports Xinhua news agency.
Madrid kicked off with coach Zinedine Zidane at home due to coronavirus along with defender Nacho Fernandez, while Sergio Ramos, Dani Carvajal, and Lucas Vazquez all missed out through injury.
Madrid's already makeshift defense was further weakened after just seven minutes when Eder Militao was sent off after a foul on Levante striker Sergio Leon which stopped a clear goalscoring opportunity. The referee first gave a yellow card but changed it to red after consulting with the VAR.
Despite going down to 10 men, Real Madrid went ahead after Marcos Asensio finished off a quick break, although Levante felt the move began with a foul by Ferland Mendy in the Madrid area.
Jose Luis Morales equalized for Levante with a sweetly placed half-volley across Thibaut Courtois on the half-hour and that allowed Levante to slow the game down and make Madrid chase the ball.
The visitors had a great chance to take the lead from the penalty spot just after the hour after Vinicius Jr fouled Carlos Clerk, but Courtois did magnificently to save Roger Marti's spot-kick, getting across his area and putting out a strong hand to deflect away Marti's shot.
However, the Levante forward had the last laugh 13 minutes from time when he headed home the winning goal following a quickly taken short corner.