Pepe and Isco completed a fine comeback from a 2-0 half-time deficit but Barcelona are now firm favourites for the title with two games to play
News of an impending strike resulting in the postponement of league games after May 16 dominated much of the build-up and things were no smoother on the pitch for Madrid, who hit the woodwork three times and only secured a share of the spoils during the closing stages to leave Barca four points clear with two matches left.
Madrid controlled much of the first half and were denied by the crossbar twice early on through Gareth Bale and Ronaldo before an injury to Toni Kroos was quickly followed by Paco Alcacer's opener.
Javi Fuego doubled Valencia's lead shortly after and then goalkeeper Diego Alves equalled Andoni Zubizarreta's record of 16 penalty saves in La Liga, as he thwarted Ronaldo just before the interval.
The Real fightback began early in the second half as Pepe headed in from a corner and, as Alvaro Negredo saw two chances go begging, former Valencia youngster Isco was the next on the scoresheet, sealing a draw in spectacular fashion late on. A draw, however, leaves their title bid in tatters.
Real began full of purpose and almost went ahead 13 minutes in, Ronaldo allowing Bale to take a free kick and the Wales star struck the crossbar with a rasping drive from 25 yards.
The woodwork came to Valencia's rescue again five minutes later, this time denying Ronaldo, who met Kroos' corner delivery with a fierce header that came back off the bar.
And Valencia took full advantage of their double reprieve, breaking the deadlock against the run of play just a minute later, Alcacer guiding Jose Gaya's fine left-wing cross beyond Iker Casillas, who could only palm it into the net.
Madrid's gameplan unravelled further in the 25th minute as an apparent thigh problem forced Kroos off and things got worse shortly after, as Dani Parejo's deep free kick was nodded past Casillas by Fuego, opening up a two-goal lead.
Luck continued to desert Madrid as the first half drew to a close.
Javier 'Chicharito' Hernandez saw his scuffed effort from 12 yards strike the left-hand post in the 40th minute, before Alves palmed away a Ronaldo penalty on the stroke of half-time after Bale had been hauled down.
Real's pressure continued at the start of the second half and Alves looked destined to keep them at bay throughout when he produced a smart save to deny Chicharito at the near post.
The hosts were back in it by the 56th minute, though, as Pepe rose highest to nod James Rodriguez's corner in, rendering Alves helpless on this occasion.
Sergio Ramos nearly restored parity 17 minutes from time with a towering header of his own, but the inspirational Alves kept his effort out with a desperate save to his left.
Substitute Negredo spurned two fine chances shortly after his 69th-minute introduction and Madrid capitalised, Isco finding the top-left corner from 25 yards against his former team to set up a nail-biting finish.
The hosts piled the pressure as they desperately sought a dramatic late winner, but Valencia held on to seal a point, leaving Madrid on the brink of defeat in the title race.
Their attentions now turn to keeping their Champions League defence alive against Juventus on Wednesday, with Carlo Ancelotti's men 2-1 down after the semi-final first leg.