The Amavubi bag three crucial points and make a head start in Group C, where they now are favorites to advance to the quarter-finals as winners
Amavubi grabbed the two important goals through Jean Baptiste Mugiranza and Haruna Nyonzima to earn Malawi first defeat of the tournament.
Both teams started the match brightly and the hundreds of spectators in attendance only had to wait till the 7th minute for the first real chance.
The Central Africans - who are the guest team at the competition - won a free-kick on the edge of the box, but Joseph Kamwendo's resultant shot was well blocked by the 'Amavubi' wall.
Milutin Sredojevic's charges responded immediately through a long range shot from Jean Claude Iranzi that forced Flames Keeper Charles Swini into an acrobatic save. Sredojevic then surprisingly pulled off Iranzi at the half hour mark and brought on Jerome Sina
Moments later, the Amavubi struck. Good build up play from the left hand side so Jean Mwembere skip through an array of challenges before directing a free-kick into the box. Jean Baptiste Mugiranza then reacted quickest with a left footed half volley that found its way to the back of the net.
Malawi had to wait until a minute after the break to respond. But the Kamwendo's shot, with only Rwandan keeper Jean Claude Ndori to beat went over the bar.
Rwanda then doubled the lead with 11 minutes to go through Haruna Nyonzima's powerful left footed strike from 40 yards that gave the advancing Swini no chance.
The East Africans then held on to bag the three crucial points and make a head start in Group C, where they now are favorites to advance to the quarter-finals as winners.
Amavubi next play against Zanzibar on Thursday. A win would put them through to the last eight with a game against Eritrea to spare.
In an earlier Group C game, Eritrea held Zanzibar to a barren draw. Eritrea created the first chance in the 6th minute through Ahmed Abdulrahman who shot over the bar after a good flick on.
Action continues on Tuesday in Group A with South Sudan, who lost to Ethiopia 1-0 facing Kenya, who also lost to hosts Uganda. Uganda take on Ethiopia in the second match.