Goals from Goncalo Guedes and Ezequiel Garay meant that Karim Benzema's late header was a mere consolation for Real Madrid, who had lacked a creative spark all game.
Zidane again rang the changes ahead of the encounter, shuffling his pack with the inclusion of Lucas Vazquez, Marco Asensio and Toni Kroos in his starting line-up. Gareth Bale and Isco dropped to the bench, while manager's son Luca Zidane was replaced by Keylor Navas.
The changes had little positive effect with Madrid controlling possession in the game's opening stages but lacking a cutting edge. After a timid opening half an hour, the contest exploded into life in the 35th minute when Valencia’s Goncalo Guedes let fly from the edge of the area, sending a beautiful dipping effort into the bottom-left corner of Navas’ goal.
Things could so easily have become even better for the hosts in the minutes that followed. Geoffrey Kondogbia rose to power a header just wide of the target, before Rodrigo sent a powerful shot flying just over the bar.
But Madrid held on to go into the break just the one goal behind, with their fortunes not improving in the second half. Marcelo's third miss of the game lead Zidane to switch things up, hauling on Isco and Bale in an attempt to turn the game around.
The opposite happened, however, with Valencia soon doubling their lead. Dani Parejo whipped in a trademark corner and veteran centre-back Garay met it, adjusting his body well to head his side into a two-goal lead.
Just as he did against Huesca, Benzema scored a late goal for the visitors, but this one was of less consequence that his strike on the weekend. He was left completely unmarked to head home a corner and grab one back for Madrid, but it was too little too late as Valencia held on to earn a well-deserved three points.
The win takes Valencia to within one point of the Champions League places, while Real Madrid remain five points behind rivals Atletico Madrid and 13 behind leaders Barcelona. The inquest into the defeat will begin imminently.